Central Bankers Offer Up Their Views / Voyager 1
Yesterday we had several central bank speakers offering up their views on the current state of their individual economies and policy outlook. We had Fed Chair Jerome Powell’s first comments since the CPI and retail sales numbers surprised to the upside. At a “fireside chat” with the Bank of Canada’s (BOC) Macklem, Powell said that while inflation continues to drift lower, it hasn’t moved quickly enough, and rates will stay at their 23-year high “for as long as needed”.
“More recent data shows solid growth and continued strength in the labour market, but also a lack of further progress so far this year on returning to our 2% inflation goal”, Powell said. Adding: “The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence. That said, we think policy is well positioned to handle the risks that we face.”
We also heard from the ECB’s President Christine Lagarde who reiterated that the ECB is not Fed dependent and is “very close” to rate cuts if there are no major shocks in the near term. “We are observing a disinflationary process that is moving according to our expectations”, Lagarde said. Adding: “We just need to build a bit more confidence in this disinflationary process but if it moves according to our expectations, if we don’t have a major shock in development, we are heading towards a moment where we have to moderate the restrictive monetary policy”.
The Old Lady’s Governor, Andrew Bailey, also hinted that the UK might be able to lower interest rates before the Fed, believing that the inflation dynamics across the two economies are diverging. Bailey said that while demand led inflation pressure is being seen in the US, on this side of the pond there is “strong evidence” price pressure is retreating. "In the UK we're disinflating at what I call full employment. I see, you know, strong evidence now that that process is working its way through”, Bailey said. Adding: "Our judgement with interest rates is 'how much do we need to see now to be confident of the disinflation process".
Finally, nearly 50 years after being launched, Voyager 1, a Nasa probe, is now 15 billion miles away from Earth, nearing the edge of our solar system. The probe carries a golden disc full of images, sounds and words from our planet, in case “aliens” ever chance upon it. However, unlike the Pioneer spacecraft, which included a detailed depiction of a nude man and woman on its “message plaque,” the Voyager only features silhouettes after an outcry from politicians.
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