Daily update
Daily update
- Bank of Japan Governor Ueda spoke to the Japanese Diet, and was inclined to be somewhat hawkish. There was an acknowledgement of the instability of financial markets, which is hardly surprising in the wake of recent volatility—including suggestions that BoJ action may have contributed to it. The yen strengthened modestly in the aftermath.
- Central bankers’ Jackson Hole summer camp continues, with Bank of England Governor Bailey speaking. Bailey is already presiding over a rate easing process. The UK economy is more rate sensitive than some others (because of the mortgage structure) but less rate sensitive than in the past (because of demographics).
- Federal Reserve Chair Powell is to speak on the “economic outlook”. That implies that Powell (or his speechwriters) will be forward-looking. Now would be a great opportunity to outline a medium-term vision. Powell’s track record suggests we will get “data dependency” and myopia.
- The ECB publishes inflation expectations data, which does not really matter. Inflation expectations are only useful if they are actually changing behavior in an economy. Yesterday’s slowing wage growth (for negotiated settlements) is the more important point. Europeans have not politicised inflation to the same extent as in the US—governments are blamed less, but are looked to for mitigating policies.
