Central Bankers Signal Caution on Inflation at ECB Forum in Sintra
Fed, ECB, BOE and Bank of Canada chiefs warned inflation risks persist, while markets absorbed weak US jobs data and a USMCA collapse.
Top central bank officials from the United States, Europe, Britain, and Canada delivered a unified but cautious message Tuesday at the ECB Forum on Central Banking in Sintra, warning that the battle against inflation is far from finished despite recent progress. Fed Chair Kevin Warsh, ECB President Christine Lagarde, Bank of England Governor Andrew Bailey, and their Bank of Canada counterpart all stressed that price stability remains the central priority, even as inflation risks have moderated from peak levels.
Beyond inflation, the central bankers spent substantial time on the communication challenges facing their institutions, the uncertain long-term effects of artificial intelligence on monetary policy, and growing financial stability risks — signaling that policymakers are navigating a far more complex environment than a standard rate cycle. ECB's Kassik added further hawkish color, stating that one additional rate hike remains a reasonable expectation.
Read more June Jobs Report Set to Test Strength of U.S. Labor Market →
Markets had a rough Tuesday on several fronts. The Atlanta Fed's GDPNow model cratered to 1.2% growth from 2.5% previously, reinforcing concerns about the US economic trajectory. June ADP private payrolls came in at just 98,000 against expectations of 118,000, and the ISM Manufacturing PMI for June printed at 53.3, missing the 54.0 estimate. US stocks closed lower after a midday Nasdaq rally failed to hold.
On trade, Fox News reported that President Trump decided not to renew USMCA in its current form, a major development that adds fresh uncertainty to North American commerce. Crude oil futures settled at $68.58, described as the lowest settlement since the start of the Iran War, as OPEC+ weighed an August output increase of 188,000 barrels per day and U.S.-Iran nuclear talks stalled over a Strait of Hormuz toll dispute.
Continue reading at Forexlive.
