June 12, 2023
United States:
Fed Backs Away From Wages Focus, Bolstering Case for Rate Pause
Federal Reserve officials are rethinking their view that wage gains are fueling inflation, a key intellectual shift that bolsters the case for a pause in their tightening campaign this week.
Until recently, many top policymakers at the US central bank maintained that the road to lower inflation ran through the job market. The idea was that, because labor costs make up a substantial portion of the cost of providing services — an area where price pressures have been especially persistent — workers would need to feel some “pain” in the form of smaller wage increases for inflation to be brought under control.
Europe:
BOE’s Catherine Mann Says UK Government Needs Longer-Term Agenda
A Bank of England policy maker urged the UK government to move economic policy away from being an emergency response tool and onto a more sustainable footing.
Catherine Mann, who sits on the nine-member panel setting interest rates, said fiscal and monetary policy makers need to “transition from a crisis-policy phase to a longer-term agenda that tackles underlying economic, social, and environmental challenges.”
Asia:
India Inflation Cools to 25 Month Low of 4.25% in May
India’s retail inflation cooled faster-than-expected in May, providing relief to policymakers even as risks from an uneven monsoon remain.
The consumer price index rose 4.25% from a year earlier, according to data released by the Statistics Ministry on Monday. The reading is lowest since April 2021, and compares with a median forecast for a 4.32% gain in a Bloomberg survey of economists. The inflation print was at 4.70% in April.
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