The morning brought some interesting speeches by ECB and BoE bankers. Here are the most interesting sentences uttered by the bankers. The basic tone was that current 'hawkish' policy changes means 'higher for longer':
ECB Kazaks:
- WE CANNOT RULE OUT THE POSSIBILITY THAT FURTHER INTEREST RATE HIKES WILL BE NECESSARY.
ECB Wunsch:
- IT HAS BECOME LESS LIKELY THAT WE NEED TO DO MORE.
- ACHIEVING 2% INFLATION IN 2025. IS STILL A LONG WAY OFF.
- WE ARE ENTERING A FORM OF STAGFLATION.
- GROWTH RISKS ARE TILTING DOWNWARD.
- THE RISK IS TARGETING HIGHER INFLATION.
- WE ARE NOT CURRENTLY SEEING A WAGE-PRICE SPIRAL.
- INFLATION HAS FALLEN SHARPLY.
- WE ARE HEADED FOR A SOFT LANDING IN THE SHORT TERM.
ECB Makhlouf:
- MUCH OF THE MONETARY TIGHTENING HAS NOT YET BEEN IMPLEMENTED, WHILE SOME RISKS ARE FADING, NEW ONES ARE EMERGING.
- I DON'T KNOW IF WE WILL RETURN TO A WORLD OF LOW INTEREST RATES, THERE ARE TOO MANY VARIABLES.
ECB Lane:
- WE ARE SEEING SOME PROGRESS ON CORE INFLATION, BUT NOT ENOUGH.
- INFLATION AT 2.9% SHOULD NOT COMFORT US MUCH.
BoE Bailey:
- BREXIT HAS REDUCED THE OPENNESS OF THE BRITISH ECONOMY.
- THE GLOBAL ECONOMY IS EXPERIENCING "FRAGMENTATION."
- FRAGMENTATION POSES A THREAT TO FINANCIAL STABILITY.
- EXPECT THE NEXT INFLATION READING TO BE SLIGHTLY LOWER.
- EXPECT IT TO BE SLIGHTLY LOWER BY THE END OF THE YEAR, BUT NOT TO FALL TO 2%.
- WE BELIEVE THAT POLICY IS CURRENTLY RESTRICTIVE AND ECONOMIC GROWTH IS VERY WEAK.
- THE BASIC MESSAGE IS THAT WE THINK POLICY WILL HAVE TO BE RESTRICTIVE FOR A LONG TIME TO COME
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