Kansas City Fed President Esther George on Monday cautioned against a "rigid" approach to monetary policy in a post-pandemic era that may involve different inflation and employment dynamics than ones seen in the last few years and worked into the Fed's current policy framework. That new framework has led the Fed to pledge to continue buying $120 billion a month in bonds until the job market improves and to leave interest rates near zero for even longer even as prices begin to rise. While the bulk of Fed officials suspects those price pressures stem from temporary problems that will ease in coming months, "I am not inclined to dismiss today's pricing signals or to be overly reliant on historical relationships and dynamics in judging the outlook for inflation," George said.
Singapore sees uneven recovery after Q1 GDP tops forecasts
Singapore's economy expanded more than first thought in the first quarter and the government maintained its growth forecast for the
year, but struck a cautious note about recovery due to uncertainties from the COVID-19 pandemic. Gross domestic product (GDP)
grew 1.3% year-on-year in the first quarter, the Ministry of Trade and Industry (MTI) said on Tuesday, higher than the 0.2% forecast.
Manufacturing, finance and insurance and wholesale trade supported the expansion over the quarter. MTI maintained its GDP
growth forecast for 2021 at 4% to 6% for now but warned of a larger-than-usual degree of uncertainty. However, The pace of
recovery of the various sectors of the economy is likely to be more uneven than earlier expected.
Bank of England mostly unfazed by inflation omens
A short-term rise in prices in Britain caused by global supply chain pressures does not foreshadow longer-term inflation problems
once the economy emerges from the coronavirus pandemic, Bank of England Governor Andrew Bailey said on Monday. Britain's
inflation rate jumped to 1.5% in April from 0.7% in March, due to a mix of higher oil prices, rises in regulated household energy bills
and comparisons against weak prices a year ago. Bailey described public inflation expectations as "well anchored". The BoE
forecast this month that consumer price inflation would rise above its 2% target to 2.5% by the end of this year, before slowly falling.
However, Bailey told legislators that the central bank would need to rethink if there were signs that price pressures were becoming
more widespread.
Dollar drifts lower as Fed speakers soothe inflation fears
The 10-year government bond yield (interpolated) on the previous trading day was 1.85, +0.00 bps. The benchmark government
bond yield (LB31DA, 10.5 years) was 1.825, -0.50 bps. LB31DA could be between 1.80-1.84. Meantime, the latest closed US 10-
year bond yields was 1.61%, -2.00bps. USDTHB on the previous trading day closed around 31.36 Moving in a range from 31.28-
31.34 this morning. USDTHB could be closed between 31.28-31.36 today. Meantime, The dollar coasted at the bottom of its recent
range on Tuesday, as softer-than-expected U.S. data and fresh insistence from Federal Reserve officials that policy would stay on
hold allayed investor fears about inflation forcing interest rates higher.
Sources : Bloomberg, CNBC, Investing, CEIC
