Latest news with #ForumonCentralBanking
Mint
02-07-2025
- Business
- Mint
Euro zone bonds steady ahead of ECB speakers, shrug off Trumps bill
LONDON, - Euro zone government bond yields were steady in early trading in Europe on Wednesday, taking their lead from Treasuries, which barely reacted to the passing of U.S. President Donald Trump's landmark tax and spending bill. Two European Central Bank policymakers warned on Tuesday about the hit from a further appreciation of the euro on a weak euro zone economy that is bracing for U.S. tariffs. The 90-day pause Trump activated following the market chaos unleashed by his April 2 "Liberation Day" tariff announcement expires in a week. ECB President Christine Lagarde said this week the euro zone is facing increased volatility in inflation, which will mean the central bank will have to act more forcefully to keep price pressures around its 2% target. German two-year yields, which tend to be the most sensitive to changes in rate expectations, were up less than 1 basis point on Wednesday at 1.852%. Benchmark 10-year Bund yields rose 1 bp to 2.577%, in line with 10-year Treasuries, which held at 4.255% , near their lowest since early May. Money markets show traders expect just one more rate cut this year from the ECB, which would bring the benchmark deposit rate to around 1.8%, from 2% right now. Lagarde speaks later on Wednesday, delivering the closing remarks at the ECB's Forum on Central Banking in Portugal. ECB board members Luis de Guindos, Piero Cipollone and Philip Lane will also speak during the day. Italian 10-year yields rose 2 bps to 3.489%, bringing their premium over Bunds to 90.5 bps, according to LSEG data. The spread is close to its lowest in a decade. This article was generated from an automated news agency feed without modifications to text.
The Star
01-07-2025
- Business
- The Star
Fed Chair Powell sticks to wait-and-see stance on interest rates
NEW YORK, July 1 (Xinhua) -- U.S. Federal Reserve Chair Jerome Powell on Tuesday reiterated his wait-and-see stance on interest rates while admitting that the Trump administration's tariffs prevented the Fed from lowering interest rates early. "As long as the economy is in solid shape, we think the prudent thing to do is to wait and see what those effects might be," said Powell at the European Central Bank (ECB) Forum on Central Banking in the Portuguese resort town of Sintra. U.S. inflation is likely to go up later this summer despite uncertainties on the timing and magnitude of price increase from the duties, according to Powell. The Fed would have already cut interest rates in 2025 if not for the shockwaves from tariffs announced by U.S. President Donald Trump, according to Powell. "In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs," said Powell. The Fed has kept the target of federal funds rates unchanged at 4.25 percent to 4.5 percent this year. The Fed's wait-and-see mode has drawn fierce criticism from Trump, who has urged lowering interest rates to reduce the U.S. burden of paying interest on hefty debts. Powell and the entire Board of Governors of the Federal Reserve System should be ashamed of themselves for not cutting interest rates, according to Trump's post on social media on Monday. "The Board just sits there and watches, so they are equally to blame," added Trump.
Mint
01-07-2025
- Business
- Mint
‘We are watching': Fed chief Jerome Powell says Donald Trump's tariffs to lift US prices this summer
Federal Reserve Chair Jerome Powell said he expects to see the impact of tariffs on inflation data in the coming months. Despite this, he acknowledged the significant uncertainties surrounding the exact timings and magnitude of these effects. 'We're watching. We expect to see over the summer some higher readings,' Powell said on Tuesday. Powell was speaking at the European Central Bank's annual Forum on Central Banking in Sintra, Portugal, moderated by Bloomberg. Still, he added, policymakers are prepared to learn the impact could be 'higher or lower, or later or sooner than we expected.' The US central bank is currently wrestling with an awkward tension between its forecasts and recent data. The Fed has put interest rates cut on hold this year, despite facing intense pressure from President Donald Trump. A key reason for this delay is to assess whether tariff-driven price hikes will lead to persistent inflation. But so far, the price hikes aren't showing up. Powell reiterated that without Trump's expanded use of tariffs, the Fed probably would have cut rates further this year. 'In effect, we went on hold when we saw the size of the tariffs, and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,' Powell said. 'We think that the prudent thing to do is to wait and learn more and see what those effects might be,' he added. When asked whether July was too soon for a rate cut, Powell didn't rule out the possibility. 'We are going meeting by meeting,' he emphasised, stating that any decision will depend on how the data evolves. The next Federal Open Market Committee meeting is on July 29-30 in Washington. Policymakers voted unanimously in June to once again hold rates steady. However, updated quarterly projections revealed a split among Fed officials regarding the future path of rates. While 10 policymakers anticipate at least two cuts this year, seven projected no cuts in 2025, and two others foresee just one reduction before the end of the year. Trump's imposition of new tariffs on dozens of US trading partners, along with his frequent fluctuations on the specifics of the duties and halting progress on striking trade deals, has led to uncertainty in the economic outlook, the news agency reported. Forecasters widely expect the tariffs to put upward pressure on inflation and dampen economic growth. However, economic data have shown little impact on prices or the labour market. 'We've always said that the timing, amount and persistence of inflation would be highly uncertain,' Powell said on Tuesday. Two Trump-appointed Fed governors, Christopher Waller and Michelle Bowman, have argued that a rate cut could be appropriate as soon as the Fed's meeting later this month, citing benign economic data as one factor.
Yahoo
01-07-2025
- Business
- Yahoo
'Too soon' to see price effects from tariffs, says Bank of England's Bailey
Bank of England governor Andrew Bailey said it is "too soon" to see the price effects from the trade and tariffs action. Speaking at the European Central Bank's annual Forum on Central Banking in Sintra, Portugal, Bailey said he was observing a 'softening' in the UK economy and 'softening in the labour market,' reinforcing expectations that the BoE's next move on interest rates will be to lower them. Earlier in the day, Bailey left the door open to a rate cut at the monetary policy meeting in August. 'I think the path of interest rates will be gradually downwards, I've not changed my mind on that,' Bailey told CNBC ahead of the summit. Futures markets are pricing in a 75% chance that the monetary policy committee will lower the base rate from 4.25% to 4% in August, with two more quarter-point cuts anticipated by year-end. Bailey noted that the UK labour market, an important source of inflation pressure, is beginning to cool. "The key question" for the next MPC meeting, he said, is whether that softening "is going to come through and create the context where inflation will come back down to target". Read more: Eurozone inflation hits 2% ECB target after June interest rate cut Average wage growth excluding bonuses slowed to 5.3% in May, according to the latest Office for National Statistics data, down from 5.6% a month earlier. Bailey said this easing, along with softer demand, would help bring inflation back to the Bank's 2% target. It currently sits at 3.4%. Bailey also welcomed the decline in energy prices following the Israel-Iran ceasefire. This, he said, created a "helpful backdrop" for the MPC's deliberations. He also acknowledged the impact of global uncertainty on UK business investment, suggesting the BoE may need to prioritise supporting growth. With British businesses 'putting off investment decisions,' Bailey hinted that further tightening could be counterproductive. Elsewhere in Sintra, US Federal Reserve chair Jay Powell echoed Bailey's caution on tariffs, saying the full inflationary effects of Donald Trump's recent trade measures had yet to materialise. 'If you ignore the tariffs for a second, inflation is behaving pretty much exactly as we have expected and hoped that it would,' Powell said. 'We haven't seen the effects much yet from tariffs and we didn't expect to by now.' He added: 'We went on hold when we saw the size of the tariffs, and essentially all inflation forecasts for the United States went up materially as a consequence ... We didn't overreact. In fact, we didn't react at all. We're simply taking some time. "As long as the US economy was in solid shape, we think the prudent thing to do is to wait and learn more and see what those effects might be.' The Fed chair's comments come as he faces mounting pressure from Donald Trump to cut rates to mitigate the consumer impact of the trade war. Powell, however, reiterated the Fed's independence: 'I'm very focused on just doing my job. The things that matter are using our tools to achieve the goals that Congress has given us.' His remarks were met with applause from the audience. Read more: Global economy to slow amid 'most severe trade war since 1930s', says Fitch Powell added he couldn't say whether the Fed could cut interest rates as soon as this month. "It all depends on the data", he insisted, adding that the Fed is going "meeting by meeting". Christine Lagarde, president of the ECB, struck a cautiously optimistic tone in the wake of news that eurozone inflation had edged up to 2% in June from 1.9% in May — reaching the central bank's medium-term target. 'I am not saying 'mission accomplished', but I say 'target reached', OK,' Lagarde said. But she warned of continued uncertainty, citing geopolitical tensions and the risk of economic fragmentation as 'two-sided risks' to the inflation outlook. 'We have to continue to be extremely vigilant, and remain committed to delivering on the inflation target,' she said, concluding: 'We are well-equipped to navigate the tormented waters that we should anticipate.'
Mint
01-07-2025
- Business
- Mint
Powell speaks in Europe as Trump piles pressure on Fed
Jerome Powell will try to project stability without worsening the fight over Federal Reserve independence at a gathering sometimes referred to as the European equivalent of the central bank's Jackson Hole economic conference. The Fed chair will speak Tuesday morning at the European Central Bank's Forum on Central Banking in Sintra, Portugal, as the White House steps up plans to replace him and fractures inside the Fed become harder to ignore. Treasury Secretary Scott Bessent told Bloomberg on Monday that there are already people at the Federal Reserve who could take over for Powell when his term ends in May. He also said that the administration might fill a key Fed board seat that opens in January with someone who could later take over as chair. President Donald Trump made clear in a Fox News interview over the weekend that successor will be expected to cut interest rates aggressively. Shortly after Bessent's remarks, Trump took to social media to escalate his attacks on Powell and the Fed board, accusing them of costing the country 'trillions of dollars" by keeping rates too high. Trump said the full board 'should be ashamed of themselves." The strategy reflects a push by the administration to steer monetary policy ahead of Powell's 2026 exit. Markets are already reacting: The dollar and bond yields have both fallen. At the same time, divisions are widening within the central bank. Two Trump-appointed officials, Gov. Christopher Waller and Vice Chair for Supervision Michelle Bowman, have called for rate cuts as soon as July, citing softer inflation and early signs of weakness in the job market. Other officials, including Powell, are urging patience, warning that tariff-driven price pressures, geopolitical issues, and other Federal policy complicate the path to easing. Officials held rates at 4.25%-4.50% at the Fed's June meeting and signaled that there could still be two rate cuts later this year. But the Summary of Economic Projections showed a growing divergence—eight officials foresaw two cuts this year while seven policymakers predicted there would be none. That fragmentation is playing out against a fragile economy. Thursday's jobs report for June could complicate the picture both for those policymakers who favor cutting rates, and for those who see a need to hold them steady. Economists expect payroll growth to slow and the unemployment rate to edge higher, signs that a cooling of the labor market is under way. A stronger-than-expected report could give Fed officials cover to hold rates steady for longer, while a weak result may fuel calls for earlier cuts, both from inside the Fed and the White House. Those pressures will be front and center when Powell joins ECB President Christine Lagarde, Bank of England Governor Andrew Bailey, Bank of Japan Governor Kazuo Ueda, and Bank of Korea President Chang Yong Rhee for a policy panel at Sintra. It is scheduled to start as the stock market opens at 9:30 a.m. Eastern. Write to Nicole Goodkind at
