Asks about ECB's Peter Kazimir saying rate hikes could come sooner, and if an 'insurance hike' is likely.
Host
Janet Henry
Chances of an ECB rate rise this year have risen. They still have their first hike in 2027, but the risk is higher now.
Asks how sticky the inflation push from oil is, and how they are modeling it.
Host
Janet Henry
Modeling oil at $80 average for 2026, assuming the highest price is in the next month. Compares to 2022 but notes economies and labor markets are weaker now.
Asks what control central banks have over near-term inflation risk from energy.
Host
Janet Henry
Central banks must maintain credibility and keep inflation expectations anchored. They will wait for data and react if inflation does not come in line with forecasts.
Asks if the energy shock is necessarily hawkish for the Fed.
Host
Janet Henry
In some senses, yes, because inflation is still elevated. But the Fed has a dual mandate and is roughly at neutral. If the labor market stays strong and inflation goes a lot higher, it would be hawkish.
Asks about the importance of backward-looking CPI data today.
Host
Janet Henry
Doesn't put much importance on CPI due to noise from last year's government shutdown. Will wait for April data to see core CPI. All data is backward-looking before the oil shock.
Asks about UK gilts and the BOE response, given UK vulnerability to energy shocks.
Host
Janet Henry
The BOE also has to wait. They have postponed their rate cut call to November. The UK has a perception of a more persistent inflation problem.
Asks which country has fiscal space to deal with the oil shock.
Host
Janet Henry
Very few countries have fiscal space after post-COVID spending. If oil gets out of control, we may see intervention anyway, even if it's unaffordable.