German Govt Source Rejects Report On Berlin Backing Joint EU Debt For Loans To Ease Energy Crisis - RTRS

It is a pleasure to join this discussion today. Inflation is high in the United States and around the world reflecting the lingering imbalance between robust demand and constrained supply caused by the pandemic and Russia's war against Ukraine. Global supply chains have eased significantly, but by some measures they are still more constrained than at nearly any time since the late 1990s. High inflation places a burden on all Americans, but especially lower-income families, who spend three-fourths of their income on necessities—more than twice the share spent by higher-income families. The Federal Reserve has tightened policy strongly to bring inflation down, and U.S. tightening is being amplified by concurrent foreign tightening. We are starting to see the effects in some areas, but it will take some time for the cumulative tightening to transmit throughout the economy and to bring inflation down. Uncertainty remains high, and I am paying close attention to the evolution of the outlook as well as global risks. Higher interest rates are working to temper demand and bring it into better alignment with supply, which is still constrained. Output has decelerated so far this year by more than anticipated, suggesting that policy tightening is having some effect. Real gross domestic product (GDP) declined at an annual rate of roughly 1 percent in the first half. Real private domestic final purchases stepped down from a 6.4 percent pace last year to an annual rate of only 1.3 percent during the first half of this year. Recent revisions to national income and product accounts data imply that the current stock of excess savings held by households is lower and has been drawn down more rapidly in recent quarters than had been previously estimated. Indeed, by Board staff estimates, the revisions imply that the stock of excess savings held by households is about 25 percent lower, which may imply a more subdued pace of consumer spending going forward than had been projected. Market expectations for the level of the policy rate at the end of the year are now more than twice as high as they were just seven months ago. As a result of the significant increase in interest rates and associated tightening in broader financial conditions, I now expect that the second-half rebound will be limited, and that real GDP growth will be essentially flat this year.3 The moderation in demand due to monetary policy tightening is only partly realized so far. The transmission of tighter policy is most evident in highly interest-sensitive sectors like hou tweet at 1:35pm: FED'S BRAINARD: FOR A WHILE, MONETARY POLICY WILL BE RESTRICTIVE. tweet at 1:35pm: FED'S BRAINARD: STRONG WAGE GROWTH AND HIGH RENTAL COSTS INDICATE THAT CORE SERVICE INFLATION WILL EASE SLOWLY. tweet at 1:37pm: Fed's Brainard: Labor Market Showing Tentative Signs Of Rebalancing Fed's Brainard: Some Measures Of Wage Growth Show Deceleration Fed's Brainard: It Will Take Time For Effects Of Higher Rates to Bring Inflation Down tweet at 1:37pm: *Fed's Brainard: Uncertainty High, Watching Outlook, Global Risks *Fed's Brainard: Fed To Take Spillovers From Policy Into Account *Fed's Brainard: Favors Fed Moving In Data-Dependent, Deliberate Manner