21.5.14 - Central bakers are talking too much (?)

# Cunsumer Price Index (CPI) jumped the most since 2009 in april 

미국 4월 CPI가 전달에 비해 0.8% 상승했고, 근원소비자물가지수는 0.9%상승했다. 이는 1982년 4월 이후 가장 높은 상승이다.

 

연율로는 4.2%올랐는데, 이는 2009년 이후 가장 높은 연율이다.

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# Officials at the Federal Reserve are holding their line that the recent acceleration in price pressures will prove transitory.

Bloomberg reporter Steve Matthews reckons six reasons.

1. Inflation expectations are under control
2. There remains slack in the labor force with wage gains limited
3. An Atlanta Fed index of sticky prices is rising less than one for flexible prices
4. Many U.S. firms remain reluctant to raise prices on their goods
5. Technological advances and globalization will keep a cap on prices
6. So-called base effects mean prices were always going to jump after falling so much last year

“The case is really quite strong for the outlook for inflation being quite moderate,” said David Wilcox, a former head of the Fed’s research and statistics division and now a senior fellow at the Peterson Institute for International Economics.

 

“The basic strategy is exactly the right one, which is to project a realistic confidence about the outlook for inflation, combined with a readiness to pivot if circumstances change.”

 

>> The outlook of inflation will be quite moderate. Have a realistic confidence about it. But, prepare to pivot if circumstances change.

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# Are central bankers talking too much?

The more business leaders hear, the smaller the effect on the economy they attribute to their central banks.

 

While important for informing managers about central bank policies, there may be too many speeches, especially from board members other than governors.

 

Governors provide a consistent message over time, whereas other board members are more likely to convey diverging messages that confuse the receivers.