EM LATAM CREDIT: Panama Protests Persist - Negative
Jun-06 19:11
(PANAMA; Baa3neg/BBB-/BB+) "*PANAMA'S MULINO CALLS FOR END OF PROTEST TO PRESENT BANANA BILL" - Bbg...
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FED: Powell Doesn't Specify on Unemployment Rate Rise That Could be Tolerated
May-07 19:11
- Q: Congress is extending the tax cuts and I know you have talked many times about how the debt path is unsustainable but given that we are also talking right now about the economy slowing, potentially even recession, is there a danger that spending cuts now could slow growth a lot more?
- A: I don’t think they need our advice on fiscal policy any more than we need their advice on monetary policy.
- Q: In your Jackson Hole comments last year, you said you would not welcome further cooling in labor market conditions, the unemployment rate then was 4.2%, which is what it is now, forecasters, many forecasters now predict a higher jobless rate. How has your tolerance for weakening labor market conditions changed compared to a year ago?
- A: It was quite a different situation. What was happening last year is that over the space of six, eight, seven months, the unemployment rate went up by almost a full percentage point. At the same time, payroll job numbers were getting softer and softer so there was really obvious concern about downside risk to the labor market. And so at Jackson Hole and then in September, we wanted to address that forthrightly - it was important that we send that signal. Fortunately, since then, the unemployment rate has really been moving sideways at a level that is well in the range of mainstream estimates of maximum employment so that concern has gotten a lot less.
- Q: How much of a rise in the u/e rate could you tolerate?
- A: I won’t give a specific answer. We have to now be looking at both variables and which of them is demanding, if one of them is demanding our focus more than the other, that would tell us what to do with policy. If they are more or less equally distant and equally or not distant, then we don't have to make that assessment. The assessment is you wait.
FED: Addressing the Dual Mandate is the Very Challenging Task
May-07 19:06
- Q: It sounds you say it was unclear how kind of interest rate decisions you will make later this year. In March there was guidance that two cuts were penciled in for this year. Is that now, that guidance from the last press conference, has that been overtaken by events at this point?
- A: We don’t do a SEP at every meeting and we don’t poll people. I don’t want to make a specific projection where we are relative to that. We have a meeting in six weeks with SEP. I’m not going to hazard a guess today.
- Q: When you address the issue of how the Fed would handle both rising unemployment and rising inflation, how are you thinking about the fact that addressing one could exacerbate the other? How do you handle those challenges?
- A: This is the issue with the two goals being intentioned. It's a very challenging question. I think you know what our framework document says: we will look at how far each variable is from its goal and also we will factor in the time it would take to get there. So, that's going to be potentially a very difficult judgment. But the data could break in a way that it's not. I just don't think we know that. The data could easily favor one or the other. And right now there's no need to make a choice and no real basis for doing so.
FED: Fed Doesn't See Big Economic Effects in the Data
May-07 19:01
- Q: You’ve said wait and see and that the economy is doing fine, but impacts are already showing up, at ports and with businesses and consumers feeling it. For main street, what’s the breaking point and what would have to happen to see a rate cut?
- A: Really don’t see in the data big economic effects. We see souring sentiment but that shock from tariffs hasn’t hit yet. We’re going to be looking at both sentiment and real economic data. Remember there will be two effects with weaker economic activity & higher unemployment vs potentially higher inflation. It’s not at all clear what the appropriate response for monetary policy is. Unemployment hasn’t gone up, job creation is fine and layoffs aren’t increasing in any kind of impressive way.
- Q: Trump now says he doesn’t plan to remove you as Chair.
- A: I don’t have anything more for you on that.
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