Monetary policy news covering interest rates, quantitative easing, central bank decisions, and money supply management.
Despite signs of cooling inflation, the Federal Reserve may still raise interest rates to combat persistent price pressures. The central bank has been weighing further rate increases to ensure inflation returns to target. New FOMC minutes show heightened concern among policymakers about AI-driven inflation risks.
The Bank of Japan is expected to raise its economic growth forecast at its July meeting while leaving the policy rate unchanged. Officials will discuss increasing the growth projection from 0.5% for the year ending March 2027 and may revise their downside risk assessment.
This commentary argues that as the Bank of England's balance sheet approaches its preferred minimum range, the shift to short-term repo operations may tighten liquidity and crowd out private activity. It suggests introducing longer-term repos and a structural bond portfolio to anchor liquidity and meet regulatory needs.
This commentary argues that Bank of Canada Governor Tiff Macklem has faced a series of unprecedented supply shocks during his tenure, from COVID-19 to geopolitical conflicts, and that the central bank is adapting by developing new forecasting models to better navigate a more volatile global economy. It suggests that the bank's initial misreading of inflation stemmed from models ill-suited to supply-side disruptions.
This commentary argues that Federal Reserve Chair Kevin Warsh faces a no-win scenario due to President Trump's conflicting policies: Trump's tariffs and military action in Iran have driven inflation to 4.2%, yet he demands rate cuts. The author contends that Warsh must choose between fighting inflation and bowing to political pressure.
Japan's government will state in its final economic blueprint that decisions on specific monetary policy tools should be left to the Bank of Japan, clarifying its stance after an earlier draft caused market turmoil. The blueprint also says a decision on cutting the consumption tax on food will be reached by early August.
This commentary argues that Andy Burnham's team may seek to reform the Bank of England's mandate, potentially adding a growth objective alongside its inflation target. It notes that Louise Haigh, a key Burnham ally, previously advocated for re-examining the Bank's remit, suggesting that the current focus on price stability may be too narrow.
Federal Reserve Bank of Kansas City President Jeffrey Schmid reiterated his stance that food prices should be included in core inflation for monetary policy. He warned inflation remains 'too hot' and above target, urging caution despite better-than-expected June data.
Treasury yields fell for the week as inflation data showed deceleration, leading traders to abandon bets on a July Federal Reserve rate hike. Short-maturity yields led the decline, though oil price gains limited the move and preserved some wagers on a rate hike by year-end.
This commentary argues that the Bank of Canada's decision to hold interest rates steady reflects a balancing act between inflationary pressures from the Middle East conflict and a shaky domestic economy. It suggests that most economists expect rates to remain unchanged for the rest of the year, though a spike in oil prices could alter that outlook.