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Conference with heads of Fed, ECB and BoE

The European Central Bank held a conference today in which the heads of the three most important central banks in the world took part.

Below we present key comments

Powell:

  • The economy will withstand strong interest rate hikes

  • We now know a lot about how little we knew about inflation before (...)

  • "Is there a risk that the Fed will act too harshly? There is such a risk, but now we should not worry about it "

  • "A much greater risk is that the Fed will not be able to restore price stability"

  • A "soft landing" is possible but will be difficult to achieve

  • The economy is in great shape (...)

  • The Fed is not responsible for the dollar position

  • Strong demand "attacked" the vertical supply curve

  • If inflation expectations are de-anchored, the cost of fighting inflation will be too high

  • These words do not sound very optimistic and rather indicate that the Fed has put everything on one card - a total fight against inflation. Of course, the FED could do more, but at the same time it does not care that it could harm the economy. This is a total turning point from what the Fed presented itself exactly a year ago.

Lagarde:

  • We are dealing with a powerful defragmentation risk in the market (increase in EMU spreads)

  • Not only the ECB has misunderstood the problem of inflation

  • We are waiting for inflation data on Friday

  • We recently announced what will probably take place in July (hike by 25 bp)

Bailey:

  • It is clear that the economy is slowing down

  • There are many signs that we need to do more

  • The bank's policy will reduce the impact of wage increases

  • Inflation will continue to rise

Meanwhile, EURUSD falls below 1.05 amid expectations that the Fed does not intend to change its current policy regarding interest rate hikes. Source: xStation5

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