Monetary policy news covering interest rates, quantitative easing, central bank decisions, and money supply management.
New York Fed President John Williams said interest rates are appropriately set and he does not see persistent inflation from the Iran War. He expects inflation to peak soon but remain elevated this year, and suggested the Fed drop language signaling a rate cut. Dallas Fed President Logan warned the central bank may need to raise rates later this year.
SBI Chairman CS Setty said at the Citi 2026 India Conference that growth momentum will stabilise if the RBI holds policy rates steady. He noted market expectations are largely aligned towards a pause when the MPC announces its decision on June 5.
Federal Reserve Governor Michelle Bowman cautioned against raising interest rates in response to the current inflation spike, arguing that reacting to temporarily elevated energy prices would add unwarranted policy restraint. She spoke in Reykjavík on May 29, as the PCE price index rose 3.8% in April, though the Dallas Fed's trimmed mean index suggests the surge is narrow and energy-driven.
ECB Executive Board member Isabel Schnabel stated the central bank can no longer look through the inflationary impact of the Iran war, as price pressures spread beyond energy and risk unanchoring expectations. She noted damage to infrastructure and supply chains has altered price dynamics durably, and policymakers may need to act even if the conflict ends immediately.
This commentary argues that the Reserve Bank of India is likely to keep its policy rate unchanged due to supply-driven inflationary pressures from the US-Iran war and El Niño, which are less responsive to rate hikes. It presents contrasting views from economists, with some favoring a pause to avoid harming growth and others advocating a hike to anchor inflation expectations.