Central Bank Watch – Eyes on Fed Speakers and CPI

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    Fed’s Powell in a conversation hosted by the Economic Club of Washington

    Tuesday, 07/02/2023

    Labor market is extraordinarily strong
    Sometimes just I get data the night before it’s released, but just me
    Message from last week’s FOMC is that disinflationary process has begun but has a long way to go
    Repeats that ongoing rate increases will be appropriate, still have not reacted sufficiently restrictive level
    Vote on monetary policy takes place around noon on the second day of FOMC
    My guess is that it will take this year and next year to get down to 2%
    There is now a shortage of workers in the US and ‘it almost feels structural’
    The labor market is ‘at least’ at maximum employment
    Notes that he has regular conversations with most major central banks
    The biggest challenge we face at the Fed is completing the challenge of getting inflation back to 2%
    Repeats that they’re not seeing deflation in core services and that they will need to keep rates high to do it
    We’re not seeing disinflation in housing but expect to see that happen
    Wants to see disinflation in core services ex-housing, says that’s what he worries about
    We still expect that the labor market will soften
    The reality is that we’re going to react to the data, if we get stronger data, we could raise rates higher than we expect

    Helmholtz Watson

    For the most part no surprises from central banks this past week. We got rate hikes as expected from Australia, India, and Sweden. However, Banco de M
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