The heads of the main central banks The world reaffirmed on Wednesday that they believe further monetary policy tightening is necessary to rein in stubbornly high inflation, but continue to believe they can do so without triggering recessions.
US Federal Reserve Chairman Jerome Powell did not rule out further rate hikes at back-to-back Fed meetings, while the chair of the European Central BankChristine Lagarde, confirmed the expectations that the agency will increase rates in July, something that she said is “likely”.
“Monetary policy has not been tight enough for long enough“, said Powell at an annual meeting of central bankers organized by the ECB in the Portuguese resort town of Sintra.
“I would not at all rule out a move in back-to-back meetings“, he claimed. The next meeting of the Open Market Committee of the fed It is scheduled for July 25 and 26.
Powell He said that the US labor market, in particular, needs to relax further to ease the pressure on prices. Although he recognized that there is a “significant probability” that there is a recession, stated that “not the most likely case”.
lagarde He said that the stagnant euro zone economy may enter a recession this year, but stressed that this was not the basic expectation of the ECB.
“We still have a long way to go”, he said about the fight against inflation. “We are not seeing enough tangible evidence that core inflation, particularly domestic prices, is stabilizing and declining”.
The governor of bank of england, Andrew Baileytold the same panel that last week’s unexpected 50 basis point interest rate hike reflected a resilient economy and persistent inflation, adding that the BoE did not currently expect a recession.
On future monetary measures to reduce UK inflation, which is the highest in the Group of Seven (G7) rich countries, Bailey argued that “we’ll do whatever it takes”.
The governor of bank of japan, kazuo uedahad a markedly different message from the other members of the panel, stating that the BOJ would see a good reason to change its relatively looser monetary policy if it had “a reasonable certainty” that inflation would accelerate in 2024 after a period of moderation.
Although general inflation exceeded 3%, the bank of japan was keeping monetary policy loose because core was still below its 2% target, he said Ueda.
Source: Reuters
Source: Gestion
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