The European Central Bank held a conference today in which the heads of the three most important central banks in the world took part.
Below we present key comments
Powell:
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The economy will withstand strong interest rate hikes
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We now know a lot about how little we knew about inflation before (...)
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"Is there a risk that the Fed will act too harshly? There is such a risk, but now we should not worry about it "
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"A much greater risk is that the Fed will not be able to restore price stability"
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A "soft landing" is possible but will be difficult to achieve
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The economy is in great shape (...)
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The Fed is not responsible for the dollar position
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Strong demand "attacked" the vertical supply curve
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If inflation expectations are de-anchored, the cost of fighting inflation will be too high
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These words do not sound very optimistic and rather indicate that the Fed has put everything on one card - a total fight against inflation. Of course, the FED could do more, but at the same time it does not care that it could harm the economy. This is a total turning point from what the Fed presented itself exactly a year ago.
Lagarde:
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We are dealing with a powerful defragmentation risk in the market (increase in EMU spreads)
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Not only the ECB has misunderstood the problem of inflation
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We are waiting for inflation data on Friday
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We recently announced what will probably take place in July (hike by 25 bp)
Bailey:
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It is clear that the economy is slowing down
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There are many signs that we need to do more
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The bank's policy will reduce the impact of wage increases
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Inflation will continue to rise
Meanwhile, EURUSD falls below 1.05 amid expectations that the Fed does not intend to change its current policy regarding interest rate hikes. Source: xStation5
