Latest news with #MonetaryPolicyReport
New York Post
2 hours ago
- Business
- New York Post
Fed divided over whether to slash interest rates in July
Federal Reserve officials are signaling a widening divide over when to begin cutting interest rates, with Governor Christopher Waller pushing for a reduction as soon as next month — while Richmond Fed President Thomas Barkin is warning that tariff-driven inflation risks still loom large. 'I think we're in the position that we could do this as early as July,' Waller told CNBC's 'Squawk Box' on Friday. 'That would be my view, whether the committee would go along with it or not.' Waller argued that inflation has cooled enough to justify easing monetary policy and downplayed concerns over Trump-era tariffs. 'It should be a one-off level effect and not cause persistent inflation,' he said. 4 Federal Reserve Governor Christopher Waller signaled Friday that the central bank could begin easing interest rates as early as next month. REUTERS 4 Richmond Fed President Thomas Barkin is warning that tariff-driven inflation risks still loom large. REUTERS Barkin took a more cautious tone, telling Reuters: 'I don't think the data gives us any rush to cut…I am very conscious that we've not been at our inflation target for four years.' He pointed to ongoing uncertainty over trade policy, telling Reuters: 'There will be some inflationary impact. It's hard to know how much.' A Federal Reserve governor is a nationally appointed official who always votes on monetary policy. The president of a regional Fed bank, such as Richmond, votes on a rotating basis and focuses on regional conditions. Barkin noted the labor market remains solid and consumer spending is steady. 'Nothing is burning on either side such that it suggests there's a rush to act,' he said. His comments came just after the Fed released its latest Monetary Policy Report to Congress, which acknowledged that inflation is 'somewhat elevated' and trade policy impacts are 'highly uncertain.' Consumer spending, Barkin said, is 'holding up fine. It's not frothy. It's not weak.' Employers, he added, are still in a 'low-hiring-low-firing' posture. The central bank held its key rate steady this week. Projections showed a near-even split: 10 officials see two or three cuts in 2025; nine see one or none. 'There are two perfectly reasonable views that are articulated there,' according to the Richmond fed boss. Waller urged a cautious start. 'You'd want to start slow and bring them down, just to make sure that there's no big surprises. But start the process. That's the key thing,' he told CNBC. Markets showed mixed signals Friday. As of 1:01 PM EDT, the Dow Jones rose 118.13 points (0.28%) to 42,289.79. The S&P 500 edged down 0.67 points to 5,980.20, and the Nasdaq slipped 54.82 points (0.28%) to 19,491.45. 4 Fed Chair Jerome Powell said this week that the central bank would keep interest rates steady. Getty Images 4 President Trump has been agitating for the Fed to lower interest rates for months. AP Trump has called for steep rate cuts to ease pressure on the $36 trillion national debt, recently labeling Fed Chair Jerome Powell 'stupid' and a 'numbskull.' Still, Powell and others have maintained a cautious stance, emphasizing a wait-and-see approach. 'We've been on pause for six months, thinking that there was going to be a big tariff shock to inflation. We haven't seen it,' Waller said. The next Fed meeting comes just ahead of a July 9 trade deadline that could bring another round of tariffs. 'I'd say the overwhelming reaction we're still getting is wait and see,' Barkin said. 'Wait and see is not put your foot on the brakes. It's just not put your foot on the gas.'
Business Times
5 hours ago
- Business
- Business Times
Still early to assess tariff impact on US economy, Fed report says
THE Federal Reserve's latest Monetary Policy Report to Congress, released on Friday (Jun 20), said US inflation is somewhat elevated and the labour market is in solid shape. However, it suggested that President Donald Trump's tariffs have likely only begun to be felt, and repeated the central bank's view that it can wait for more clarity before taking action. 'The effects on US consumer prices of the increase in import tariffs this year are highly uncertain, as trade policy continues to evolve, and it is still early to assess how consumers and firms will respond,' said the report, which comes ahead of next week's testimony before Congress by Fed chair Jerome Powell. 'Although the effects of tariffs cannot be observed directly in the official consumer price statistics, the pattern of net price changes among goods categories this year suggests that tariffs may have contributed to the recent upturn in goods inflation.' So far, though, the effect of tariffs has yet to show up in the official data for some goods, notably cars, though they have weighed on household and business sentiment. The Monetary Policy Report, which comes twice yearly, generally summarises topics already well known to Fed watchers and market participants. On Wednesday, Fed policymakers wrapped up their rate-setting meeting with a decision to leave the policy rate in the 4.25 to 4.5 per cent range, where it has been since December. Central bankers want to see how the Trump administration's tariffs and other policies affect inflation, the labour market, and the economy broadly before they adjust borrowing costs. Powell said he expects to see 'meaningful' inflation in the coming months, and policymakers generally see the economy slowing and the unemployment rate ticking up to 4.5 per cent this year. The report said that despite uncertainty the financial system has been 'resilient'. REUTERS
Business Standard
11 hours ago
- Business
- Business Standard
Dollar index sees mild pull back but heads for weekly gain
The dollar index pulled back on Friday even as persistent geo-political tensions in Middle East limited sharp downside in the safe haven currency. As per latest report, the White House says US President Donald Trump will make a decision on whether the US will join in the Israel-Iran conflict in the next two weeks. Meanwhile, US Federal Reserve (Fed) yesterday announced to leave the interest rate unchanged at 4.5% in June but still sees around 50 basis points of interest rate cuts through the end of 2025, weighing on the greenback. Moreover, President Donald Trump on Thursday reportedly targeted Federal Reserve Chair Jerome Powell, calling for a massive 2.5-point reduction in interest rates. Investors now await the Fed's Monetary Policy Report, scheduled for release on Friday. The Federal Reserve Board will submit reports to Congress containing discussions of "the conduct of monetary policy and economic developments and prospects for the future." The dollar index that measures the greenback against a basket of currencies is quoting at 98.18, down 0.31% on the day and is set for weekly gain of around 0.50%.
The Star
a day ago
- Business
- The Star
Greece's economy to grow 2.3 pct in 2025: central bank
ATHENS, June 19 (Xinhua) -- Greece's economy is projected to grow by 2.3 percent in 2025 and 2.0 percent in 2026, according to the Monetary Policy Report released Thursday by the Bank of Greece, the country's central bank. The report was submitted to both the Greek parliament and the cabinet on the same day, reaffirming projections outlined in the 2025 state budget, which was approved by the parliament seven months ago. The Greek economy grew by 2.2 percent in 2024. According to the central bank, domestic consumption will remain the primary driver of economic growth, while investment and exports are also expected to make positive contributions. The Bank of Greece commended the country's economic resilience in the aftermath of the 2009-2018 sovereign debt crisis, highlighting Greece's ability to maintain a steady pace of growth despite multiple external shocks. However, the report also issued a warning about growing international risks. "The global economy is set to slow further in 2025, weighed down by a more restrictive environment for international trade and a sharp increase in uncertainty due to U.S. trade and economic policies, as well as resurgent geopolitical tensions," it stated. Potential threats include rising trade protectionism, a sharper-than-expected slowdown in the euro area, and heightened uncertainty in global markets and the energy sector. These factors, the report warned, could have adverse effects on Greece's economic trajectory, said the report. In light of these challenges, the central bank called for the continued pursuit of prudent fiscal policy, the accelerated implementation of structural reforms, and the full absorption of available European Union (EU) funding.
Yahoo
2 days ago
- Business
- Yahoo
Bank of England expected to hold interest rates as inflation comes in above target
The Bank of England (BoE) is widely expected to keep interest rates on hold at 4.25% this Thursday, as policymakers weigh rising geopolitical risks, persistent inflation, and conflicting domestic economic data. The Monetary Policy Committee (MPC) will announce its decision on Thursday, and markets are betting that it will maintain its 'gradual and careful' approach to easing policy. Since August 2024, the BoE has reduced rates four times amid stubborn inflation and resilient wage growth. However, divisions have emerged within the committee. May's meeting revealed a more fractured consensus, dampening expectations of a faster pace of rate cuts. A subsequent batch of weaker domestic data has since revived speculation that the MPC may slow down its pace of lowering borrowing costs. 'This month's Bank of England policy meeting should be as straightforward a decision [to leave rates unchanged] as they come,' said George Buckley, economist at Nomura. 'We continue to look for 3.5% terminal rates by February next year — i.e., three 25bp cuts at Monetary Policy Report meetings. We think that the settling point would be at the upper end of the neutral range. This is a modestly quicker cutting cycle than the market sees.' Read more: Are UK investment assets becoming more attractive? Have your say The central bank faces a complex global and domestic backdrop. Rising oil prices (BZ=F) following Israeli airstrikes on Iran have reignited fears of broader conflict in the Middle East, compounding volatility already driven by US president Donald Trump's shifting trade policy. Meanwhile, sterling (GBPUSD=X), has strengthened sharply against the dollar, further complicating the inflation outlook. Domestically, the picture remains uncertain. The UK economy contracted by 0.3% in April, reversing earlier growth. Wage growth slowed markedly in the three months to April, and the unemployment rate ticked higher, raising questions about the underlying strength of the labour market. Inflation, however, remains a central concern. Consumer price inflation slowed down to 3.4% in May but remains well above the BoE's 2% target. NIESR associate economist Monica George Michail said: 'We forecast inflation to remain above 3% for the remainder of the year amidst persistent wage growth and the inflationary effects from higher government spending. 'Additionally, the current tensions in the Middle East are causing greater economic uncertainty. 'We therefore expect the Bank of England to keep rates on hold this Thursday and implement just one further cut this year.' Suren Thiru, economics director at ICAEW, said: 'May's dismally modest drop is unlikely to quell concerns over inflation, as it owed more to the unwinding of distortions caused by Easter falling in April this year, particularly on services prices, than a telling reduction in cost pressures.' He added: 'An interest rate cut on Thursday looks implausible as rate setters will probably want to hold off until August to get a better understanding of the impact of this global uncertainty before taking the plunge once again.' Sarah Coles, a personal finance columnist at Yahoo Finance UK and head of personal finance at Hargreaves Lansdown, said: 'If inflation figures don't hold any surprises, interest rates are held, and expectations stick for two more cuts this year, we could well see rates fall again.' Paul Dales, chief UK Economist at Capital Economics, said that April's GDP contraction 'won't prompt the Bank of England to cut interest rates next Thursday. But it is one more piece of news pointing to another cut in August'. Sanjay Raja, chief UK economist at Deutsche Bank, shared a similar view: 'We expect the Monetary Policy Committee (MPC) to keep Bank Rate unchanged at 4.25% on 19 June. But increased concerns around the labour market are likely, in our view. Global risks in May are likely to give way to domestic risks in June. And we expect the MPC to open the door to an August rate cut. Read more: UK inflation slows to 3.4% in May as transport costs ease 'We stick to our call for three quarter-point rate cuts this year (Aug, Nov, Dec) and one final rate cut in February, taking the Bank Rate to 3.25%.' Others are also anticipating a summer move. Enrique Diaz-Alvarez, chief economist at Ebury, said: 'Against this backdrop, the Bank of England is expected to hold rates steady this week, but absent a strong inflation report, the MPC may well signal that the next cut could come in the summer. "This may come in the form of a tweak to the bank's hawkish bias or the voting pattern, with the possibility that two or three officials vote for an immediate cut on Thursday. ING analysts also flagged August as the likely next move. 'Barring big surprises in the data over the next month, we think the latest disappointing jobs numbers help cement an August rate cut," they wrote. "Bear in mind that at 4.25%, the bank rate is still very much in restrictive territory, which offers the Bank plenty of scope to keep lowering it. We expect a further cut in November and two more moves in 2026, taking the terminal rate to 3.25%.' However, not all market participants are convinced Threadneedle Street will act soon. Read more: UK economy shrinks by 0.3% in April 'While the broader trajectory for rates remains downward, the path ahead now looks shallower than previously anticipated,' said Steve Matthews, investment director for liquidity at Canada Life Asset Management. 'Market pricing suggests the next move is unlikely before September, and possibly later. Added to this, uncertainty around US tariffs and trade policy is creating a more cautious global backdrop — no one wants to make a move prematurely.' Across the Atlantic, all eyes will be on the US Federal Reserve, which is widely expected to leave interest rates unchanged at its meeting on Wednesday. Investors will be closely watching updated economic projections, seeking clues as to how heavily policymakers are factoring in recent signs of economic softness and the degree of concern around ongoing trade uncertainty, unresolved fiscal negotiations, and the growing risk of conflict in the Middle East. The Bank of England is set to announce its latest interest rate decision at midday on Thursday 19 June. Read more: Average UK house asking price drops by more than £1,000 Why you can trust an 18-year old with their junior ISA – and how to create one BT CEO hails the UK as 'phenomenal' for tech unicornsError in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
