2024-04-20 02:57:25
[이스라엘, 이란에 보복 공습]
Fed’s second-in-command: “I don’t see the urgency for a rate cut”
Bank of Japan governor: “Financial policy can be changed”
Decision to prioritize inflation response amidst high inflation
The heads of central banks in major countries around the world are one after another showing a hawkish attitude toward the base interest rate (preferring monetary tightening). This is based on the judgment that responding to the increase in international oil prices due to geopolitical tensions in the Middle East and unpredictable price rises is a priority. Countries such as Korea and Japan are faced with the task of relieving the burden of import prices due to the rise in exchange rates (depreciation of the currency) caused by the ‘strong dollar’.
On the 18th (local time), John Williams, president of the Federal Reserve Bank of New York, the de facto second-in-command of the Federal Reserve following U.S. Federal Reserve Chairman Jerome Powell, said, “There is an urgency to cut interest rates” thanks to the growth of the U.S. economy. “I think interest rates will have to be lowered at some point, but that timing will depend on economic indicators,” he said.
Governor Williams had previously mentioned that an interest rate cut this year would be possible, but now he has changed the expression from ‘this year’ to ‘someday’. Even regarding the possibility of raising interest rates, he said, “We can raise it if necessary to reach the Fed’s inflation target.”
Atlanta Fed President Rapid Bostic also said, “It may be difficult to lower interest rates by the end of this year,” and added, “If prices start to move in the opposite direction of our target, we have no other option than to respond.”
The reason why the expressions of US Federal Reserve officials have changed is because the combination of sticky prices, hot growth, and uncertainty in the Middle East situation has made it difficult to declare victory in the war against inflation. Chairman Powell has consistently been confident that the inflation rate will recover to the 2% level. However, when the inflation rate in March was 3.5%, which exceeded market expectations, it became a ‘reset’ situation where we had to fight against inflation again.
In line with the Fed’s sudden change, U.S. financial institutions are also changing their interest rate cut forecasts one after another. Bank of America (BoA) moved its forecast for the first interest rate cut from June to December. Goldman Sachs, which was confident of an interest rate cut in March, changed its outlook to two cuts starting in July.
After the meeting of finance ministers and central bank governors of the G20 major economies (G20) held in Washington on this day, Bank of Japan Governor Kazuo Ueda said of the rising import prices due to the low yen, “If it becomes a significant impact that cannot be ignored, there may be a change in financial policy.” “It can be done,” he said. Japan has lifted negative interest rates for the first time in 17 years, but has indicated its intention to raise interest rates further if import prices continue to rise due to the low yen. The yen-dollar exchange rate, which was around 140 yen per dollar at the beginning of this year, is approaching 155 yen due to the accelerating decline in the yen.
New York = Correspondent Kim Hyun-soo [email protected]
Tokyo = Correspondent Lee Sang-hoon [email protected]
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2024-04-20 02:57:25