*We followed the panel discussion at the European Central Bank conference held in Sintra, Portugal, with the participation of the heads of four major central banks. ECB President Lagarde, Fed Chairman Powell, BOE Governor Bailey, and BOJ Governor Ueda made statements regarding monetary policy. ECB, Fed, and BOE conveyed clear messages in favor of further tightening. Fed Chairman Powell emphasized the need to continue with a tighter policy while highlighting that inflation and employment are strong simultaneously. ECB President Lagarde mentioned that there might be an interest rate increase in July. BOE Governor Bailey signaled the continuation of interest rate hikes by pointing to clear evidence of sustained inflation. As usual, Japan remained the only central bank that did not emphasize interest rate hikes. The Governor of the Bank of Japan stated that core inflation remains above 2%, and they also pay attention to movements in the yen. BOJ continued to diverge from the Fed, ECB, and BOE.

*The recently announced Australian inflation figure is quite positive, and this data could change the balance for the decision of the Reserve Bank of Australia in July. The CPI came in at the lowest level in 13 months, at 5.6%. However, the annual core CPI remaining at 6.4% may not be very encouraging for the RBA. Nevertheless, we can say that the uncertainty of the RBA meeting will increase.

*According to the report released by the National Australia Bank, intervention preparations for the yen, which has been steadily depreciating lately, are expected to be conducted around 145-150. With the anticipation of further speculative transactions in the yen above 145, there is a consideration that the Bank of Japan may intervene by buying yen as it approaches 150. However, it should be noted that central banks generally do not like to intervene in exchange rates. If this happens, it is usually a last resort.

*In the morning session of the European Central Bank conference in Sintra, Portugal:
-From the ECB’s Vasle: We need to continue with a tightening policy at our next meeting.
-From the ECB’s Vujčić: There is a good chance of an interest rate increase in September.