SINTRA, Portugal (Reuters) – The world’s top central bank leaders reiterated on Wednesday that they believe further policy tightening is needed to curb stubbornly high inflation, but remained confident they could do so without triggering an outright recession achieve this goal.
Federal Reserve Chair Jerome Powell did not rule out further rate hikes at successive Fed meetings, while ECB President Christine Lagarde confirmed that the bank will raise interest rates in July interest rate expectations, and said the move was “likely”.
Powell told the ECB’s annual gathering of central bankers in the Portuguese mountain resort of Sintra that “policy restrictions are not going on long enough.”
“I don’t think back-to-back meetings should ever be considered at all,” he said. The next FOMC rate-setting meeting is scheduled for July -25.
Powell said the U.S. labor market in particular needs further softening to ease price pressures. While acknowledging that there was a “high probability” that a downturn could result, he said it was “not the most likely scenario”.
Lagarde said the flattening euro zone economy could slip into recession. The economy will be outright recession this year, but stressed that this is not the ECB’s baseline forecast.
“We have more work to do,” she said of fighting inflation. “We have not seen enough tangible evidence that underlying inflation, particularly domestic prices, is stabilizing and falling.”
Bank of England Governor Andrew Bailey told the same panel that last week’s surprise Situation 50 The rise in interest rates reflects the resilience of the economy and continued inflation, adding that the Bank of England is not currently forecasting a recession.
Regarding future policy action, with the UK having the highest inflation rate among the rich G7 countries, Bailey said: “We will take the necessary actions.”
Bank of Japan Governor Kazuo Ueda sent a very different message to others on the panel, saying inflation would accelerate if the BOJ was “pretty sure” Enter 50, then the Bank of Japan will have every reason to change its relatively loose monetary policy. ) after a period of slowing down.
Ueda said that while headline inflation was above 3%, the BOJ kept monetary policy accommodative as underlying inflation remained below its 2% target.
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