The Federal Reserve will need to raise rates to higher levels than previously anticipated to prevent inflation from picking up if the recent strength in hiring and consumer spending continues, a central bank official said Thursday.

“I would be very pleased if the data we receive on inflation and the labor market this month show signs of moderation,” Fed governor Christopher Waller said in remarks posted on the Fed’s website. “But wishful thinking is not a substitute for hard evidence in the form of economic data. After seeing promising signs of progress, we cannot risk a revival of inflation.”

Mr. Waller didn’t say in his prepared remarks whether he would continue to favor raising interest rates by a quarter-percentage point, which was his preference at the Fed’s last meeting, or whether he would instead support a larger half-point increase at its next gathering, March 21-22.

(WSJ-Continue Reading) 

The Bank of Japan's decade of ultraloose monetary policy is raising fresh questions about its merits as architect Gov. Haruhiko Kuroda prepares to hand over the reins, with his predecessor calling it a "great monetary experiment" with "modest" effects.

But despite the grumbling, a quick exit from easy money would have its own downside. Kazuo Ueda, the nominee to succeed Kuroda in April, will have to tread a fine line to strike the right balance between minimizing policy side effects and propelling growth.

(Nikkei-Continue Reading) 

Almost two-thirds of Bank of Japan watchers now expect monetary policy change by June following the first extensive hearings of governor nominee Kazuo Ueda, according to the latest Bloomberg survey.  

All except three of 49 economists polled see no policy change at the final meeting of outgoing Governor Haruhiko Kuroda ending on March 10, according to the Bloomberg survey conducted following the two-day parliamentary hearings ended Monday. 

Instead, there’s now a greater focus on the June meeting, set to be Ueda’s second

(BBG-Continue Reading) 

Unfazed by the dollar's recent strength, analysts polled by Reuters predict a weaker greenback in a year amid an improving global economy and expectations the U.S. Federal Reserve will stop hiking interest rates well ahead of the European Central Bank.

Bucking the latest downward trend, the dollar rose nearly 3% in February, its first monthly gain since September, surprising FX markets which were betting on the currency to remain on the back foot for the remainder of the year.

The dollar index is up over 1% for 2023 largely because of stronger-than-expected U.S. economic data and a corresponding change to expectations of interest rate hikes by the U.S. central bank.

(RTRS-Continue Reading)