Central bankers speak this week - UOB

Analysts at UOB Group broke down the start of the week's Central Bank speak .

Key Quotes:

"Dallas Fed President Kaplan (voter in 2017 FOMC) who was speaking in San Francisco (20 Jun) said he wants to see that a recent slowdown in price pressures is “transitory” before pushing forward with monetary tightening. He noted that the Fed needed to remove some amount of accommodation, and then be patient to wait to see signs of inflation. He remains supportive that the Fed should begin trimming balance sheet sometime before the end of 2017. When asked about how many rate hikes he expects this year, Kaplan says he wants to keep an open mind and he warned about the need to be careful about raising rates further if 10-year treasury yield stays where it is.

FOMC Vice Chair Stanley Fischer who was speaking on the topic of housing and financial stability in Amsterdam on Tuesday (20 Jun) did not comment on the US economy or US monetary policy. He only noted that US financial system stronger than pre-crisis but more needs to be done to strengthen the housing finance system.

Chicago Fed President Charles Evans (voter in 2017 FOMC) continued with his cautionary tone about the soft US inflation environment and opined that the Fed needs to ‘follow through’ on its 2 percent objective. He expressed nervousness about recent soft inflation, and that it is challenging to get back to 2%. He also postulated that there might be something else holding inflation back, not just one-off reasons. If global environment is holding back inflation, then he believes that the Fed would need shallower path of rate increases. That said, he remains confident that the fundamentals of the US economy are good, and it is likely will see more inflationary pressures. He also believed that the Fed is probably ‘pretty close’ to point where the US central bank will begin reducing balance sheet.

Boston Fed President, Eric Rosengren (non-voter in 2017 FOMC) who was speaking at a macro-prudential conference (20 Jun) warned that the low rate environment is likely to persist into the future and that will likely to make fighting recessions tougher. He also warned that low rates put intermediaries and economies at risk, and that policymakers must factor in financial stability concerns.

Bank of England (BOE) Governor Mark Carney who was speaking at Mansion House event in London on Tuesday (20 Jun) essentially said that “anemic” wage growth and mixed signals on consumer spending and business investment mean “now is not yet the time” to raise interest rates, and his comment sent the UK pound to a two-month low. He noted that the BOE is obliged to balance trade-off between lowering inflation and supporting growth “in such exceptional circumstances”. He also warned that firms (in UK) may soon need to activate Brexit contingency plans, depending on if and how soon transition deal reached. He also thinks they will soon find out if Brexit is a “gentle stroll along a smooth path to a land of cake and consumption”.