【Quick Facts】
1. Adrian Orr: Aggressive rate hikes will be reintroduced only if inflation unexpectedly moves sharply upward.
2. The minutes of the Federal Reserve meeting were hawkish.
3. Biden reiterated his support for Ukraine and will announce more sanctions against Russia.
4. The special summit of the Bucharest Nine (B9) issued a joint statement.
5. The United States may default on its debt as early as June.
6. Bullard: Hope to promote a more rapid pace of interest rate increases.
【News Details】
1. Adrian Orr: Aggressive rate hikes will be reintroduced only if inflation unexpectedly moves sharply upward.
New Zealand Fed President Adrian Orr said Thursday that more aggressive rate hikes would only be reintroduced if inflation unexpectedly moved sharply upward. Orr said that a 75 bps rate hike would only be put back on the table if inflation unexpectedly moved sharply upward from current levels. He said, “Since the November policy statement, the economy has been developing exactly as expected.” The New Zealand Fed raised rates by 50 bps to 4.75% yesterday, a lower hike than the 75 bps in November.
2. The minutes of the Federal Reserve meeting were hawkish.
According to the Fed minutes, “it will be necessary to continue to maintain a restrictive policy stance until future data provide confidence that inflation is on a sustainable slide toward the 2 percent target, which is likely to take some time. Upside risks to inflation are a key factor affecting the outlook.”
“On the terminal rate, raising the rate above the December forecast of 5.1%. Some officials felt that the policy stance was not restrictive enough, which could drag down recent progress in moderating inflationary pressures.”
Some officials were inclined or might have supported a 50 bps rate hike at the meeting at the time. It is important that overall financial conditions remain consistent with the degree of policy restraint imposed by the Committee to bring inflation back to the 2% target.
Overall, it was a moderate minutes, but was seen as hawkish because of the “50 bps hike” and the “concern that the financial environment does not match the rate hike”. After the minutes were released, swap contracts showed that the Fed is expected to raise rates by 25 bps for the next three meetings.
3. Biden reiterated his support for Ukraine and will announce more sanctions against Russia.
On the 21st, during the visit to Poland, U.S. President Joe Biden gave a speech in which he said he would continue to support Ukraine. The day before, the U.S. Department of Defense released a statement saying it would provide Ukraine with a new batch of military equipment worth $460 million. Many countries believe that the West continues to provide weapons to Ukraine, making the end of the Russian-Ukrainian conflict a long way off. In his speech in Warsaw that day, Biden reiterated that NATO’s support for Ukraine “will not shake” and promised to strengthen support for NATO’s eastern flank countries. Biden also said that the West is not conspiring to attack Russia, as Russian President Vladimir Putin has said. In addition, Biden said the United States and its allies will announce more sanctions against Russia this week.
4. The special summit of the Bucharest Nine (B9) issued a joint statement.
The special summit of the Bucharest Nine (B9), co-organized by Poland, Romania, and Slovakia, was held on February 22 in Warsaw, Poland. The meeting focused on strengthening the security of NATO’s eastern flank, the NATO Vilnius Summit in July this year and further support for Ukraine, and other topics. After the meeting, the Polish presidential administration released a joint statement for the summit. The statement said that before the Vilnius Summit, the nine countries will continue to strengthen the deterrence and defense capabilities of NATO’s Eastern flank; reaffirm support for Sweden and Finland to join NATO; and support Ukraine’s “Euro-Atlantic Vision”.
5. The United States may default on its debt as early as June.
On Feb. 22, local time, the Bipartisan Policy Center (BPC) estimated that the U.S. could default on its debt as early as June if members of Congress and the White House fail to reach an agreement on raising the federal debt ceiling. The BPC made a forecast last year that a debt default would come as early as the third quarter of 2023. However, due to the U.S. government’s decision to extend the moratorium on federal student loan repayments, the roughly $1.7 trillion the fiscal year 2023 spending bill passed by Congress late last year, and major economic changes such as inflation, the projected debt default has been pushed forward to June. The BCP warns that lawmakers must raise the debt ceiling by early summer to early fall or risk default, by then the economy could be damaged.
6. Bullard: Hope to promote a more rapid pace of interest rate increases.
Fed Bullard said the Fed is confident it can beat inflation, and he advocates accelerating the pace of the fight against inflation. A more aggressive rate hike now would give the FOMC a better chance of lowering inflation, according to Bullard. Current inflation, while down from dangerous levels in 2022, is still high.
It has not yet reached the point of the so-called terminal rate. When that level is reached… it will be known whether the next step is likely to be up or down.
If inflation continues to fall, that’s all well and good. But the risk now is that instead of inflation falling, it re-accelerates, and then what to do? There will have to be a reaction, which could be a repeat of the 1970s. It’s time to become more decisive and try to get inflation under control in 2023.
【Focus of the Day】
UTC+8 17:30 BOE monetary policy member Mann to deliver a speech
UTC+8 18:45 BOE Deputy Governor Cunliffe to deliver a speech
UTC+8 19:00 UK CBI retail sales (Feb)
UTC+8 21:30 U.S. Q4 GDP revision
UTC+8 21:30 U.S. Initial Jobless Claims
UTC+8 21:30 U.S. Continuing Jobless Claims
UTC+8 23:50 Fed’s Bostic speaks