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Federal Reserve Chairman Warsh: We don’t want to get involved in bailouts; we want to be in a position where we don’t need to bail out any entities.On July 14th, Federal Reserve Chairman Warsh reiterated his commitment not to provide forward guidance on interest rates during a hearing, with his testimony barely touching on interest rate policy. Warsh stated that the Fed is firmly committed to maintaining price stability and pushing inflation back to its 2% target, while emphasizing that the Fed possesses the policy tools needed to achieve this goal. He stated, "The more focused we are on our responsibilities, the further we can stay away from politics." Warsh also said that the Fed will re-examine its inflation framework to gain a deeper understanding of the factors driving inflation and what measures can be taken to address it. Regarding the Feds newly established working groups, Warsh stated that these groups are still in the research and exploration phase. He pointed out that discussions will initially take place among the 19 policymakers, and the entire process will be open and transparent, with research findings and policy ideas being shared regularly. On balance sheet policy, Warsh emphasized that the balance sheet is part of monetary policy, not just a matter of financial market operations. Any adjustments to balance sheet policy will be fully communicated and explained in advance, giving the market sufficient preparation time. When asked how he would respond if Trump attempted to interfere with Federal Reserve policy, Warsh responded that he would continue to fulfill his duties and insist on setting monetary policy independently. He stated that the Federal Reserve has already demonstrated its commitment to policy independence and institutional reform.Federal Reserve Chairman Warsh: More efforts are needed to combat inflation.Federal Reserve Chairman Warsh: We still have some work to do on inflation.Federal Reserve Chairman Warsh: The Fed’s dual mandates are not in conflict.

AUD/JPY Exceeds 90.30 As RBA Considers Option To Raise Rates Prior To Pause

Daniel Rogers

Apr 18, 2023 14:02

AUD:JPY.png 

 

Following the release of the minutes from the Reserve Bank of Australia (RBA), the AUD/JPY pair surged above the 90.30-point critical resistance level. According to the RBA minutes, policymakers actively considered the decision to raise rates further. However, the decision to maintain the status quo was made after the collection of additional data.

 

Citing the resilience of Australia's financial system, RBA policymakers believed that the Board's future cash rate decisions would depend on the global economy, household spending trends, inflation projections, and employment forecasts.

 

Continue to monitor China's Gross Domestic Product (GDP) statistics. Compared to its stagnant performance in the final quarter of CY2022, the Chinese economy is estimated to have grown by 2.2%. Compared to the previous annual growth rate of 2.9%, the current annual growth rate for the economy is 4.0%. Australia is China's greatest trading partner, and stronger Chinese GDP data would strengthen the Australian Dollar.

 

The announcement of the People's Bank of China (PBOC) interest rate decision later this week will be crucial. Last week, the People's Bank of China pledged to provide additional monetary support to spur retail demand. Despite the reopening of China's economy following a period of economic restraint, the country's inflation rate has been consistently declining over the past few months.

 

According to Jiji news and Reuters, the Bank of Japan is reportedly considering a projection for consumer price growth between 1.6% and 1.9% for the 2025 fiscal year, a move seen as preventing market participants from betting on the central bank's departure from stimulus. This has also delayed the possibility of a shift away from an expansionary monetary policy, which cannot be considered until the Japanese inflation rate persists above 2%.


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