Japan’s consumer prices rose at a faster pace than economists expected in May, an outcome that could fuel speculation the central bank will raise its inflation forecasts in July and even tweak its stimulus program. 

Prices excluding those for fresh food gained 3.2% from a year ago, decelerating from a 3.4% rise in April, the internal affairs ministry reported Friday.

While the national data was consistent with the results of earlier figures for Tokyo showing a renewed slowdown due to lower electricity prices, the reading still outpaced analysts’ forecast of a 3.1% increase.

A measure of the deeper inflation trend, meanwhile, continued to strengthen, in another indication that prices have more upward momentum than expected. (Bloomberg - Continue Reading)

U.S. Federal Reserve Chair Jerome Powell said on Thursday the central bank would move interest rates at a "careful pace" from here as policymakers edge towards a stopping point for their historic round of monetary policy tightening.

"We're at least close to where we think our destination is...and it only makes common sense to move...at a careful pace," Powell said at a hearing before the Senate Banking Committee.

"The point" of holding rates steady at the Fed's meeting last week, Powell said, was precisely to slow the speed with which the Fed was raising borrowing costs.

After having raised rates at 10 straight meetings, sometimes by as much as three quarters of a point at a time, the Fed skipped the June meeting. Investors now expect rate hikes to resume in July, with the Fed perhaps evaluating the need for further increases at every other session - a pace common in prior tightening cycles. (Reuters - Continue Reading)

Treasury Secretary Janet Yellen sees diminishing risk for the US to fall into recession, and suggested that a slowdown in consumer spending may be the price to pay for finishing the campaign to contain inflation.

On the chance of a recession, Yellen said “my odds of it, if anything, have gone down — because look at the resilience of the labor market, and inflation is coming down.” She spoke in an interview with Bloomberg News Thursday.

“I’m not going to say it’s not a risk, because the Fed is tightening policy,” she said, alluding to the Federal Reserve’s 10 interest-rate hikes since March 2022, with potentially more to come. 

Yellen’s latest assessment of the US economy follows a May employment report that showed job gains beating all economists’ forecasts. Home construction and retail sales for last month have also shown surprising resilience in the face of the Fed’s aggressive monetary tightening. (Bloomberg - Continue Reading)