Bank of Canada hikes by 50bp and is prepared to hit the accelerator

Good morning, everyone. I'd like to give my thanks to Columbia University's School of International and Public Affairs for partnering with the New York Fed once again and for hosting us today. It's wonderful to be here and to see so many colleagues who have traveled from near and far to attend this workshop. We'll have many important conversations over the next two days. To kick us off, I'm going to share some observations on the digital transformation of money and payments. I'll also discuss the potential implications for monetary policy implementation and for central banks more broadly. Before I begin, I must give the standard Fed disclaimer that the views I express here are my own and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or anyone else in the Federal Reserve System. I will get to payments technology in a minute. But first allow me to take you back to the year 1877. You're amazed at the sound of music coming out of a new invention—the phonograph. Fast-forward a century, and you're listening to your favorite band on a cassette tape. In the 1980s, it's a CD. In the 2000s, you're scrolling through the greatest hits on your iPod. And today, perhaps even on your way here, you listened to a streaming service on your p tweet at 11:31am: FED'S WILLIAMS: THE ROLE OF CENTRAL BANKS WILL REMAIN TO SUPPLY LIQUIDITY AND STABILITY, BUT DIGITAL CURRENCIES COULD CHANGE IMPLEMENTATION. tweet at 11:31am: FED'S WILLIAMS: STABLECOINS AND CBDC CARRY RISKS AS WELL AS OPPORTUNITY.

tweet at 11:15am: *FED'S DALY: NEED TO GET INTEREST RATE TO NEUTRAL EXPEDITIOUSLY tweet at 11:15am: ðŸ§Â*DALY: SEES NEUTRAL RATE AT ABOUT 2.5% IN NOMINAL TERMS tweet at 11:15am: *DALY SEES 50-BP RATE INCREASES AT EACH OF 2 NEXT MEETINGS tweet at 11:17am: FED'S DALY: I AM COMFORTABLE TO DO WHAT IT TAKES TO GET INFLATION TRENDING DOWN HIGH INFLATION HAS BEEN GOING ON TOO LONG I'M NOT FORECASTING BEYOND NEXT COUPLE MEETINGS BECAUSE I DON'T KNOW WHAT DATA WILL BE tweet at 11:19am: Fed's Daly: - I am willing to do whatever it takes to get inflation heading downward - I am open to pulling the reins back on the economy

Federal Reserve Bank of St. Louis President James Bullard presented “The First Steps toward Disinflation” (PDF) virtually on Wednesday at an event hosted by the Economic Club of Memphis. Bullard noted that inflation in the U.S. is comparable to levels seen in the 1970s. He added that U.S. inflation expectations could become unmoored without credible Fed action, possibly leading to a new regime of high inflation and volatile real economic performance. “The Fed has reacted by taking important first steps to return inflation to the 2% target,” he said. “Market interest rates have increased substantially, partially in response to promised Fed action.” Meanwhile, U.S. labor markets remain robust, and output is expected to continue to expand through 2022, he said. Actual Inflation and Expected Inflation Bullard noted that the Fed has a statutory mandate to provide stable prices for the U.S. economy, and that the Federal Open Market Committee (FOMC) has an associated inflation target of 2% stated in terms of headline personal consumption expenditures (PCE) inflation. He pointed out that, as of April, the headline PCE inflation rate was 6.3%; the core PCE inflation rate (which excludes food and energy prices) was 4.9%; and the Dallas Fed trimmed mean inflation rate (which measures only the middle portion of the price change distribution) was 3.8%. “The current U.S. macroeconomic s tweet at 12:58pm: *BULLARD: FED MUST FOLLOW THROUGH TO RATIFY ITS FORWARD GUIDANCE *BULLARD: CREDIBILITY OF FED’S 2% INFLATION GOAL IS UNDER STRAIN tweet at 1:01pm: FED'S BULLARD: THE EFFECTS OF THE FED'S FORWARD GUIDANCE ON RATES IS ALREADY TAKING HOLD ON ECONOMY AND INFLATION. tweet at 1:10pm: FED'S BULLARD: GLOBAL QT' SHOULD PUT UPWARD PRESSURE ON RATES.