Federal Reserve Chair Jerome Powell on Tuesday reaffirmed the U.S. central bank's intent to encourage a "broad and inclusive" recovery of the job market, and not to raise interest rates too quickly based only on the fear of coming inflation. "We have unstable employment and higher inflation," said Representative Jim Jordan, an Ohio Republican, referring to the Fed's congressionally mandated goals of ensuring maximum employment and stable prices. "Something has to give." The recent high inflation readings, however, "don't speak to a broadly tight economy" that would require higher interest rates, Powell said, referring to a "perfect storm" of rising demand for goods and services and bottlenecks in supplying them as the economy reopens from the pandemic. Those price pressures should ease on their own, Powell said.
There is no new inflation paradigm, ECB's Lane says
Inflation in the euro zone will go up at a steady pace over the coming years but there is no risk of a new period of exceptionally high price growth, European Central Bank chief economist Philip Lane said on Tuesday. The broadest measure of unemployment is at
around 15% and wage growth is weak so the current period of relatively high price growth will not turn into durable rise in prices, Lane said in an academic lecture. "It’s very difficult to have very strong wage inflation when the labour market is in that condition," Lane said. "We do think that inflation will go up at a steady pace over time, but the idea that there is some new paradigm, I don’t really buy into that."
Japan to consider tighter rules on foreign owners of domestic firms – Yomiuri
The Japanese government is considering tightening regulation on foreign funds that hold stakes in domestic firms with important
technology in areas such as the nuclear industry and defence, the Yomiuri newspaper reported on Wednesday. The new regulation will aim to prevent overseas funds and companies from slapping demands on Japanese companies that may weaken their competitive edge or leak technological expertise. The government plans to come up with specific measures by the end of this year and move toward crafting the necessary legislation, the paper said. The Yomiuri said measures being considered included one that would order foreign funds that break the new rules to sell their holdings of the Japanese firms. Through the new regulation, the government would seek to stay involved with supporting retention and development of technology deemed important even after foreign funds have already made their investment, it added.
Dollar in retreat as Powell says Fed won't raise rates on 'fear' of inflation
The 10-year government bond yield (interpolated) on the previous trading day was 1.85, +0.00 bps. The benchmark government
bond yield (LB31DA, 10.5 years) was 1.83, +1.00 bps. LB31DA could be between 1.80-1.86. Meantime, the latest closed US 10-year
bond yields was 1.48%, -2.00bps. USDTHB on the previous trading day closed around 31.75 Moving in a range from 31.66-31.79
this morning. USDTHB could be closed between 31.70-31.85 today. Meantime, The U.S. dollar remained on the back foot against
major peers on Wednesday after a two-day drop as U.S. Federal Reserve officials including Chair Jerome Powell reaffirmed that
tighter monetary policy was still some way off.
Sources : Bloomberg, CNBC, Investing, CEIC
