Central Bankers at ECB Forum Warn Inflation Fight Not Over
Fed, ECB, BOE, and Bank of Canada chiefs gathered in Sintra with a shared cautious message: price stability isn't secured yet.
If you thought central bankers were ready to declare victory on inflation, think again. The heads of four major central banks — the Federal Reserve, European Central Bank, Bank of England, and Bank of Canada — shared a stage at the ECB Forum on Central Banking in Sintra, Portugal, and their collective message was pretty clear: the job isn't done yet. While they acknowledged that inflation risks have eased somewhat, none of them were ready to pop the champagne.
Beyond the inflation talk, the central bank chiefs touched on some surprisingly forward-looking topics, including how artificial intelligence might eventually reshape monetary policy, the tricky art of communicating with markets without spooking them, and broader financial stability concerns. ECB President Christine Lagarde, for her part, signaled that the conditions were right for further rate hikes, a view echoed by ECB Governing Council member Kassik, who said one more rate hike remains a "reasonable expectation."
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Back stateside, the economic data rolling in on July 1 didn't exactly inspire confidence. The Atlanta Fed's GDPNow tracker took a notable tumble, falling to 1.2% from 2.5% — that's a pretty steep drop in growth expectations in a short stretch. Meanwhile, private payroll processor ADP reported only 98,000 jobs added in June, well below the 118,000 forecast, hinting that the labor market might be cooling faster than anticipated.
On trade, the day brought a significant geopolitical wrinkle: reports emerged that the U.S. decided not to renew the USMCA trade agreement in its current form, adding fresh uncertainty to North American trade relations. Oil markets also caught attention, with crude futures settling at $68.58 — the lowest close since the start of the Iran War — as OPEC+ looks set to raise output quotas for August by 188,000 barrels per day. It was a busy, messy day in markets, and the signals from Sintra suggest the path ahead for monetary policy remains anything but smooth.
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