US DATA: Final Factory Orders Data Reaffirm Strong Business Investment Trends

In her speech Greene presents a scenario between B and C which she dubs M (for Megan - before saying it isn't necessarily her central case). This includes additional second round effects relative to B. She also presents that hikes are likely necessarily under sceanario M. Again, this seems to be setting up for a vote for a hike.

• "I think it’s most likely that we’ll end up with second-round effects somewhere between Scenarios B and C: let’s call it Scenario M for Megan. To be clear, you should not interpret this as my central case just because I’ve named it after myself.... I do however believe it represents one reasonable interpretation of how the economy may evolve."
• "To generate Scenario M, we take the same energy paths underpinning Scenario B but incorporate the additional second-round effects channel reflecting the heightened sensitivity of long-run expectations from Scenario C. The resulting inflation path, relative to Scenario B, is entirely driven by the differences in how second-round-effects are modelled (Figure 16). Inflation in Scenario B returns to target by the end of the horizon, while it remains around 2 ½ % in Scenarios M and C."
• "For Scenario M, the endogenous path implies that more tightening would be required than is embodied in the market curve or Scenario B. This gives some indication of how policy might need to respond if greater second-round effects were to emerge given higher attentiveness by households and firms to rising inflation."

• EUR/USD: $1.1625-35(E2.4bln) $1.1700-01(E2.0bln), $1.1740-50(E1.6bln), $1.1850(E1.5bln)
• USD/JPY: Y159.75($1.2bln)
• AUD/USD: $0.7200(A$771mln)
• USD/CAD: C$1.3830($673mln)

"Prime Minister Sanae Takaichi will decide this month whether to approve a proposal to lower the consumption tax rate on food products to 1% starting in April 2027. The final adjustments will be made based on the government's view that if the tax rate is reduced to 1%, the necessary modifications to cash register systems can be made in "a maximum of 5 to 6 months.""

"The Ministry of Economy, Trade and Industry will present its views on the period for cash register modifications at a working-level meeting of the "National Social Security Conference" on the 3rd."

Link to Nikkei story here