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.
- ECB ends QE as expected and gives more explicit guidance on rates
- Inflation forecast revised up, but growth forecast revised down
- Rate hike in September at the earliest?
- Payrolls up by 223,000 persons in May, above expectations
- Unemployment rate falls to 3.8 percent, the lowest since 1969
- Fed on track to raise rates in June despite any trade war worries
Policy rate unchanged at 0.5 percent, as widely expectedNorges Bank kept the policy rate unchanged at 0.5 percent at today’s meeting, as widely expected. The central bank was also careful not to send any new signals and its assessment of the economic development was deliberately balanced, despite actual numbers having been somewhat on the weak side of Norges Bank’s expectation. The most notable deviation for the central bank’s forecast has been the weaker-than-expected inflation.
- Payrolls rise by 103,000 people in March; weaker than expected
- Unempoyment rate unchanged at 4.1%; wage growth picks up to 2.7% (2.6%)
- Weak report does not alter our outlook for three more Fed hikes this year
- Payrolls increased 313,000 in February - markedly above expectations
- Unemployment rate was unchanged at 4.1 percent due to an increase in the participation rate
- Wage growth declined from 2.8 percent to 2.6 percent, which will take the edge off rate hike fears and support equity markets