Below we present some key takeaways from the panel discussion at ECB Forum today
Investors are of course most interested in Powell's and Lagarde's comments, which have a huge impact on the EURUSD pair.
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- Very good economic and financial conditions in the medium term, but still very high uncertainty
- Supply issues are the main problem negatively affecting the US economy
- The situation of families and companies in the USA is very good
- Inflation will remain above the target in the coming months, but later inflationary pressure will ease
- Frustrating situation related to the shortage of supply of needed goods,
- The US economy will be strong next year
- The unemployment rate next year will be significantly lower than today
- The Fed believes that the currently high inflation will not translate into sustained high price dynamics and should not affect inflation expectations
- If inflation lasts long enough, we monitor if it could push up expectations. That would be a serious concern
- Interest rate increases are distant
The Fed sees a significant improvement in the situation and sees the problem of rising inflation, but at the same time points out that there is nothing to worry about as the inflationary pressure will fade away in the long term. What if this doesn't happen? We are currently seeing significant increases in energy costs, higher cotton prices, and astronomical increases in rental prices. Either way, the market sees that this is a sign of a changing policy, leading to a strengthening of the dollar.
Lagarde:
- There is no reason to expect inflation to be temporary - dovish
Kuroda:
- The BoJ can loosen monetary policy further, should the need arise
- Supply problems are limiting growth in Japan
Bailey:
- Interest rates are a key tool of the central bank
- The recovery in the UK is not uniform
EURUSD pair is testing 1.1600 level. Source: xStation5
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