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ECB Rate Hike Risks Repeat of Earlier Misstep
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- The European Central Bank is set to raise its key interest rate next week to combat rising inflation.
- Eurozone annual inflation rose to 3.2% in May from 1.9% in February, driven by higher energy prices.
- Economists warn the ECB risks repeating past errors by hiking rates amid a eurozone economy at risk of recession.
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Hammack Says Fed May Need to Respond if Inflation Persists
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- Cleveland Fed President Beth Hammack, a voting member this year, said policy may not be restrictive enough to bring inflation to 2%.
- Hammack warned that waiting for definitive evidence of embedded high inflation could require larger, costlier adjustments.
- Hammack stated that while keeping rates steady is reasonable, action may be appropriate if recent trends continue.
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Bank of Japan Could Raise Rates Even If Mideast Uncertainty Persists
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- Bank of Japan Gov. Kazuo Ueda said the bank could raise interest rates if inflation risks outweigh economic growth concerns, despite Middle East uncertainty.
- Ueda noted a positive wage-price cycle, deeply negative real interest rates, and higher crude oil prices could push underlying inflation above projections.
- Markets were pricing in over an 80% chance of a BOJ rate increase in June, while a weak yen and intensified cost pressures also contribute to inflation.
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OECD Warns of Severe Global Slowdown If Middle East Conflict Is Prolonged
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- The OECD forecasts a significant global economic slowdown in 2026 due to higher energy costs and the Middle East conflict.
- The OECD projects global output will grow by 2.8% in 2026 if Persian Gulf energy production starts to recover later this month.
- A prolonged Middle East conflict could reduce 2026 global growth to 2.1%, the weakest this century outside 2009 and 2020.
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BOE’s Greene Says Case for Rise in Key Interest Rate is Growing
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- Monetary Policy Committee member Megan Greene said the case for raising the Bank of England’s key interest rate is strengthening, with action possibly needed in weeks.
- Greene argued the Monetary Policy Committee cannot rely on markets to cool prices and fears households will expect high inflation if the BOE doesn't act.
- The Bank of England left its key interest rate unchanged in April, and some policymakers prefer waiting due to a fragile economy.
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U.S. Job Openings Increased While Hiring Fell in April
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- U.S. job openings increased to 7.6 million in April, while the hiring rate worsened to 3.2%, according to the Labor Department.
- The rate of job openings rose to 4.6% in April, but the quit rate declined to 1.9%, indicating workers’ willingness to leave jobs.
- Fed officials described April’s job scenario as relatively stable, despite data suggesting economic uncertainty weighed on firms.
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Canada’s Carney Says GDP Weakness Reflects Policy Shifts to Rebuild Economy
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- Canada’s economy showed weakness with a 0.1% annualized GDP decline in the January-March period, marking a second straight quarterly drop.
- Prime Minister Mark Carney attributed the economic weakness to government policy decisions aimed at rewiring the economy to deal with U.S. tariffs.
- The GDP report missed expectations, triggering talk of a recession, though economists say it is premature to use that label.
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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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