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Fed’s Goolsbee Warns U.S. Economy Heading in ‘Stagflationary’ Direction
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- Chicago Federal Reserve President Austan Goolsbee warned the U.S. economy could face a “stagflationary” direction.
- Mr. Goolsbee views inflation as the more immediate threat, noting U.S. inflation has been above target for five years.
- Auto producers in Mr. Goolsbee’s district anticipate supply-chain difficulties if high fuel prices persist for months.
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Fed’s Independence Still Under Threat, ECB’s Lagarde Says
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- European Central Bank head Christine Lagarde warned central bank independence is at risk, requiring voter and legislator support.
- Lagarde cited rising government debt and a fragile financial system as additional threats to central bank independence.
- European Central Bank left its key interest rate at 2% in April, with investors expecting a rate hike next month.
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Fed’s Cook Ready To Raise Rates If Disinflation Fails to Appear in Timely Manner
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- Federal Reserve governor Lisa Cook is prepared to raise interest rates if disinflation does not appear in a timely manner.
- Cook said the right course of action is to hold rates steady, but risks remain tilted toward higher inflation.
- She expects the labor market to remain stable, but is prepared to adjust policy downward if it deteriorates.
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Bank of Korea Stands Pat But Signals Tighter Policy Ahead
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- Bank of Korea held its benchmark rate at 2.50% but signaled future hikes, raising its 2026 growth forecast to 2.6%.
- The central bank increased its 2026 inflation forecast to 2.7% and its 2026 core inflation estimate to 2.4%.
- Consumer inflation accelerated to a 21-month high of 2.6% in April, fueled by elevated oil prices amid Middle East tensions.
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Bank of Mexico Cuts 2026 Economic Growth Forecast After Weak Start
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- The Bank of Mexico lowered its 2026 economic growth forecast to 1.1% from 1.6% due to a weak first quarter.
- Uncertainty from the USMCA review and the Middle East conflict adds downside risk to Mexico’s growth outlook.
- The central bank cut its benchmark interest rate to 6.5% on May 7, ending its monetary easing cycle.
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Eurozone Business Confidence Inches Higher as Price Expectations Cool
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- Eurozone business and consumer confidence edged up to 93.5 in May from 93.2 in April, according to the European Commission.
- Selling-price expectations eased across all business sectors, interrupting a steep upward trend but remaining above long-term averages.
- The European Commission cut its economic growth forecast to 0.9% for this year and raised its inflation forecast to 3.0%.
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U.S. Mid Atlantic Factory Activity Jumped in May
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- Manufacturing activity in the Richmond Fed’s region rose to 13 in May, up from 3 in April, exceeding economists’ expectation of 4.
- All three component indexes for shipments, new orders, and employment rose in May.
- The average growth rates of prices paid and prices received decreased in May, with firms expecting price growth to moderate.
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About Us
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WSJ Pro Central Banking brings you news and analysis from a global team of reporters and editors at The Wall Street Journal and Dow Jones Newswires. Send your tips, suggestions and feedback to service@dowjones.com. An artificial-intelligence tool created these summaries, which are based on the text of the article and checked by an editor. Read more about how we use artificial intelligence in our journalism.
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