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Market news

12 July 2019

Chicago Fed president Evans: Policy is currently about neutral but could be more accommodated if the aim was to lift inflation

  • Says labor markets seem quite vibrant, drawing in more people
  • Fed is still debating what for employment means in current economy
  • We should tolerate inflation both above and below 2%
  • Currently considers US economy has very solid fundamentals
  • Consumer still very strong 
  • Business investment weaker than expected
  • Sees growth for 2019 around 2% which is close to what he regards as sustainable trend
  • Business investment has been weaker despite fiscal aid
  • Nervous about under running inflation objective
  • A couple of rate cuts could lift inflation by 2021
  • Framework is adequate as long as policymakers are going to actively push for inflation of 2% to assure target is met symmetrically
  • Fed has a lot of inflation-fighting credibility, with expectations firmly anchored

Market Focus
  • UK: average earnings growth accelerated sharply from March to May
  • Earnings Season in U.S.: Major Reports of the Week
  • RBA July meeting minutes: policymakers will continue monitoring the labor market closely
  • New Zealand consumer prices climb 0.6% in Q2

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