IRAN: Trump Says Xi Offered to Help on Iran: Fox News

Speaking to the Atlantic Council, BoE's Greene notes two-sided risks stemming from the Iran conflict but points out that upside risks to inflation are paramount. 

Not surprised WEO forecasts lowered growth and raised inflation on Iran impact but reminds on single mandate. 

• “It's no surprise that the [IMF] WEO downgraded growth forecasts across the board, but also for the UK and increase the inflation forecast. We're facing a negative supply shock, and that's what negative supply shocks tend to do. UK activity was already pretty weak. We were already worried about potentially a non linear adjustment in the labour market, for example. And so this exacerbates all of that. And at the same time, this is inflationary, and so it pushes inflation up. And of course, we have a mandate of getting inflation to 2% sustainably over the medium term at the Bank of England. So we have a single mandate, and so that is the priority. But of course, activity feeds into inflation, and so this puts central bankers in the most awkward position possible. We have to figure out how to react to that trade off." 

Not immune to weaker demand side but upside risks to inflation are paramount: 

• "I'm not immune to the weaker demand side. I already saw it. There were reasons to worry about weaker demand in the UK, primarily through the consumer, because the UK consumer just keeps not spending, and it's been a bit of a puzzle for a couple years now. So now, if you have an energy shock, and people are paying much more for their energy bills and potentially food bills, given the impact of on fertiliser, you know, you could have households pull back even more. So there are definitely downside risks to demand, and I think that's important. But you know, I think that the upside risks to inflation are paramount."

She questions whether businesses genuinely don't have pricing power: 

• "When I go around the country and talk to businesses, they all say we have no pricing power, and that might be true, but it might be that they don't feel they have pricing power, because if they raise prices, they'll lose out to the next guy. But if you have an energy shock that affects everyone, then it's an opportunity for everyone to pass through higher costs."

The dust has settled on ECB President Lagarde’s remarks to Bloomberg, which were interpreted in a slightly dovish light by the market. Lagarde noted that the ECB does not have a tightening bias, and that “we’ve said very clearly that we would need data to act, but that we would not hesitate to act”.

• ECB-dated OIS now price ~58.5bps of hikes through year-end, down from ~62.5bps prior to Lagarde’s comments.  There are 8bps of hikes priced through April, down from ~9bps pre-Lagarde and almost 11bps at yesterday’s close.
• Lagarde had been scheduled to speak at 2200BST today, so her comments in European market hours are notable. On balance, they point to a slightly higher bar to an April hike compared to a few weeks ago. This would be consistent with the MNI Policy Team’s sources piece from last week.
• Ahead of the April ECB decision, important survey data is still to be released, so a hike cannot be fully ruled out by markets or Governing Council speakers yet: April flash PMIs on April 23, SAFE Survey on April 27, Consumer inflation expectations on April 28 and the EC April survey on April 30.
• Only the flash PMIs will be released before the ECB’s pre-meeting quiet period starts.

Following his announcement of a temporary suspension of fuel excise tax on gasoline and diesel from 20 April-7 September, PM Mark Carney says the measure will cost CAD2.4bln, and also applies to aviation fuel. Carney says Finance Minister Francois-Philippe Champagne will present a spring economic update "in the coming weeks" taking into account the measure. 

• Separately, the PM says that "he has no idea" whether he will serve a single mandate as PM after a question from a reporter. The current parliamentary term runs to 2029. Comes after Carney's centre-left Liberals secured a majority in the House of Commons following the 13 April special elections (see CANADA: Majority Further Bolsters PM, But Smooth Agreement On Policy Not Assured).
• Carney claims that he is not expecting to reshuffle his cabinet now that he leads a majority gov't, saying "We want to govern, we want to act." Adds that there will be "less showboating" in the Commons and more substance to the chamber's proceedings with a majority gov't, with the opposition now not able to launch an effective no-confidence vote against the PM unless he loses the support of Liberal MPs.