Cleveland Fed President Loretta Mester “each meeting is going to be in play” regarding interest rate decisions. She added, “we’re going to assess conditions, we’re going to assess how the economy’s evolving, we’re going to be looking at the risks, and we’re going to be removing accommodation.”
On the idea of a 50bps rate hike in March, Mester said “I don’t like taking anything off the table.” However, “I don’t think there’s any compelling case to start with a 50 basis point”.
“Again, we’ve got to be a little bit careful. Even though you can well telegraph what’s coming, when you take that first action, there’s going to be a reaction,” she added.
On the topic of balance sheet runoff, Mester said, “I would support selling some of our mortgage-backed securities at some point during the reduction period to speed the conversion of our portfolio’s composition to primarily Treasuries.”
Japan CGPI rose 8.6% yoy in Jan, index at highest since 1985
Japan corporate goods price index rose 8.6% yoy in January, slowed slightly from December’s 8.7% yoy, but beat expectation of 8.2% yoy. At 109.5, the index was at the highest level since September 1985.
Export prices jumped 12.5% yoy on Yen basis, 6.6% yoy on contract currency basis. Import prices surged a massive 37.5% yoy on Yen basis, and 28.0% yoy on contract currency basis.
However, consumer prices remained sluggish, with national CPI core at 0.5% yoy in December, which some economists expected to slow to 0.3% yoy in January.
BoJ officials, including Governor Haruhiko Kuroda, have indicated that it would be hard to see consumer inflation to sustainably reach 2% target without wages rise.
Full CGPI release here.