May 14, 2025
United States:
Fed’s Jefferson Sees Lower Growth, Says Inflation Could Rise
Federal Reserve Vice Chair Philip Jefferson said tariffs and related uncertainty could slow growth and boost inflation this year, but monetary policy is well positioned to respond as needed.
Jefferson stressed heightened uncertainty about government policies, and said it is not yet clear if tariffs will have a short-lived or more persistent effect on price growth. He marked down his economic growth forecast for this year, but said he still expects the economy to continue to expand.
Europe:
ECB Focuses Bank Oversight on Biggest Issues to Boost Efficacy
The European Central Bank will concentrate its bank supervisory work on the most egregious deficiencies, in an effort to increase its effectiveness.
Starting in July, the ECB will stop monitoring on a regular basis if banks are addressing low-level issues the regulator has identified, it said in a newsletter article on Wednesday. Instead, its enforcement work will focus “on the most severe open findings,” the ECB said.
Asia:
Japan to Target 1% Real Wage Gains Within Next Five Years
The Japanese government is likely to establish 1% growth in real wages as its first-ever official target for pay increases, a move that comes as prolonged inflation continues to exert a drag on domestic demand.
The government will set a goal of reaching 1% annual gains in real wages by the fiscal year starting in April 2029, according to a policy draft by Prime Minister Shigeru Ishiba’s new capitalism panel released Wednesday. The goal is based on the premise that stable and sustainable 2% inflation is in place.
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