Goolsbee: Bank of Japan Institute for Monetary and Economic Studies Conference 2026

The IRGC said it carried out an attack on a U.S. airbase in retaliation for an incident near Bandar Abbas Airport, Tasnim reported. IRGC stated that any escalation by the U.S. would be met with a “more decisive” Iranian response. Iran’s Revolutionary Guard Corps said the U.S. is responsible for the outcome of recent developments, according to Tasnim.

Ms Schnabel started her presentation by noting that since the Governing Council's previous monetary policy meeting on 18-19 March 2026, movements in euro area financial markets had continued to be driven by developments in the Middle East and their impact on energy prices. Amid elevated volatility, markets continued to expect the oil price shock to be persistent. Although upside risks had moderated, oil was priced significantly higher, over an extended period of time, than it had been before the start of the war in the Middle East. As a result, markets continued to price in a notable and sustained inflationary impact. Inflation fixings had increased further for both 2026 and 2027. This suggested that investors anticipated some indirect or second-round effects extending beyond the first year of the conflict, before inflation was expected to return to the target of 2% in 2028. At the same time, markets continued to expect the economy to be relatively resilient. Prices of risk assets, including equities, as well as sovereign and corporate bond spreads, and the exchange rate of the euro had moved back towards the levels observed prior to the conflict. Earnings expectations had been revised up since the beginning of the war, which was consistent with the view that the impact on economic growth would be short-lived. At the same time, there had been negative surprises in macroeconomic data for the euro area. Therefore, buoyant risk asset markets, which were hovering near all-time highs, might indicate some investor complacency given the size and persistence of the energy price shock. With inflation still perceived as the dominant risk, investors were pricing in cumulative policy rate hikes by the ECB of 73 basis points in 2026. Overall, financial conditions had eased since the Governing Council’s previous monetary policy meeting, driven mainly by strong risk asset markets, but they remained somewhat tighter than before the war. ECB ACCOUNTS: UPSIDE RISKS TO INFLATION AND DOWNSIDE RISKS TO GROWTH HAD INTENSIFIED. ECB ACCOUNTS: WEAKNESS COULD PERSIST WELL BEYOND THE END OF THE CONFLICT Just in | ECB Reports: Consumer side shows no signs of second-round effects as wage negotiations are yet to occur. ECB REPORT SHOWS IT'S STILL TOO EARLY TO SEE SECOND-ROUND EFFECTS ON CONSUMERS, AS WAGE NEGOTIATIONS ARE REQUIRED. ECB MEMBERS MIGHT HAVE SUPPORTED HIGHER RATES.

Fed's Jefferson says monetary policy is well positioned to respond, not prejudge June meet Jefferson: Global Economic Developments and the U.S. Economy Good morning. It is an honor to be here at the Bank of Japan, and I appreciate the opportunity to speak with you today. I am looking forward to our discussion, but first I want to share some framing thoughts. I will briefly discuss three developments in the global economy that I am monitoring, and then I will update you on my outlook for the U.S. economy and the path of monetary policy. The first global development I am tracking is the significant increase in energy prices due to the conflict in the Middle East. The rise in crude oil prices poses downside risks to growth and upside risks to inflation around the globe. Elevated energy prices are particularly challenging for countries like Japan that are net energy importers. While being a net energy exporter buffers the U.S. to an extent against energy shocks, it is not immune to the effects of disruption to global supply. Gasoline prices in the U.S. increased significantly since the onset of the conflict and remain notably elevated. I am watching whether higher energy prices will start to weigh on consumer spending. The second development is the rapid advancement of artificial intelligence (AI) technology. As a central banker, I am optimistic about AI's promise to drive productivity and growth, though I am also monitoring its effects on the labor market and inflation. And the third development is the effects of disrupted trade flows on the global economy. Since the pandemic, there have been multiple disruptions to global trade that have affected both supply and price levels. Against this global backdrop, my focus, of course, is on the U.S. economy. Recent economic growth in FED GOV JEFFERSON/BOJ INSTITUTE: VIEW RISKS TO INFLATION 'TILTED TO THE UPSIDE;' EXPECT INFLATION TO DECLINE LATER THIS YEAR #Jefferson #FederalReserve #economy FED GOV JEFFERSON/BOJ INSTITUTE: WATCHING WHETHER HIGHER ENERGY PRICES WILL START TO WEIGH ON CONSUMER SPENDING #Jefferson #FederalReserve #economy