Currencies
Since the beginning of last year, the dollar has gained a dizzying 25%, a rise that tightens financial conditions across the rest of the world.
Oil
Kalish also pointed out that the economy is less energy-intense now, so falling oil prices (not a given) will not help as much as they did in the 1980s. UK seeks LNG supplies from US.
United States
The Fed signaled more pain ahead, world leaders slammed Russia at UN, BOE s time to raise rate and EU planning further action to bring down energy prices. The Fed signaled more pain ahead, world leaders slammed Russia at UN, BOE s time to raise rate and EU planning further action View in browser Good morning. Under these conditions, the Fed and other central banks would have to hike well beyond the currently priced 4.5%, and keep rates higher for longer.
The Fed is clear that its goal to crush inflation could mean causing real pain. Those economic projections could be said to undermine the Fed s credibility, although most observers seem prepared to interpret it as necessary diplomacy. Policy makers, criticized for being too late to realize the scale of the US inflation problem, are moving aggressively to catch up. By the end of 2024, the Fed expects rates to be somewhere between 2.5% and 4.5%. As for the possibility of a pivot: It remains, but conditions have now tightened beyond the level at which the Fed lost its nerve in 2018.
The overwhelming likelihood is that the Fed will make a mistake (nobody can be perfect), and that it will be a hawkish one. Without more help, the burden of controlling inflation falls squarely on the Fed.
The Fed is clear that its goal to crush inflation could mean causing real pain. Those economic projections could be said to undermine the Fed s credibility, although most observers seem prepared to interpret it as necessary diplomacy. Policy makers, criticized for being too late to realize the scale of the US inflation problem, are moving aggressively to catch up. By the end of 2024, the Fed expects rates to be somewhere between 2.5% and 4.5%. As for the possibility of a pivot: It remains, but conditions have now tightened beyond the level at which the Fed lost its nerve in 2018.
The overwhelming likelihood is that the Fed will make a mistake (nobody can be perfect), and that it will be a hawkish one. Without more help, the burden of controlling inflation falls squarely on the Fed.
China
It called on Beijing to refocus on reform, saying recent Chinese policy decisions mean the country is now seen as less predictable, less reliable and less efficient.
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