Global Macro Comment — The lay of "The Land"

What do we really know about inflation? The state of the art was recently laid out by top academics and central bank economists at the "Inflation: Drivers & Dynamics" conference, held at the Federal Reserve Bank of Cleveland. In this comment we give a first-hand account of what was discussed in "The Land". The conference gave greater insight into the anchoring of inflation expectations at central banks' targets, mixed with a new understanding of inflation fundamentals. Change is often hard work, but policymakers would be smart to embrace these latest insights.

Fast Comment US — Fed hikes rates, signals two more rate hikes in the second half of this year

1. Fed hikes rates as expected
2. Two more rate hikes in the second half of this year signalled
3. Policy rates higher than the long-run neutral rate in 2019

Fast Comment US — 'Whoop, whoop' goes the labour market

1. Payrolls up by 223,000 persons in May, above expectations
2. Unemployment rate falls to 3.8 percent, the lowest since 1969
3. Fed on track to raise rates in June despite any trade war worries

Fast Comment US — US April labour market data a mixed bag

1. US April labour market data a mixed bag
2. Employment growth slowing slightly
3. Market reaction muted - Fed outlook unchanged

Fast Comment US — Fed leaves rates on hold; June hike cemented

1. Fed leaves rates on hold, as expected
2. Minor tweaks to press statement; June hike cemented
3. USD a touch lower; short rates unchanged

Global macro forecast — Global boom starting to cool

• Stimulus measures in the US fuel growth but add risk
• Bottlenecks and higher interest rates slowing global growth
• Protectionism causing uncertainty