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      Greene: Here we go again? Assessing the inflation risks of the recent energy shock
      Submitted 39 hr ago      |From bankofengland.co.uk|3 comments

      It’s a real pleasure to join you here at the University of Derby. As the birthplace of the modern factory system and as the so-called “capital of rail”, Derby is the perfect place from which to explore some of the implications for monetary policy of disruptions to supply chains. The past few years have been a real doozy on this front. Starting in 2020, we had Covid 19 lockdowns, supply chain disruptions and a sharp contraction in economic activity. Two years later, Russia’s invasion of Ukraine caused a surge in energy prices, compounding existing pressures and contributing to UK inflation of over 11%. And now we are facing yet another energy shock following the eruption of conflict in the Middle East, including attacks on energy infrastructure and the effective closure of the Strait of Hormuz. It would seem that negative supply shocks have become the new norm (Greene, 2025). But not all shocks are created equal. Their impact on the economy, and the appropriate monetary policy response to them, will depend on a number of different factors. I intend to explore the latest shock in the Middle East in light of this today. But before I get into the economics, I think it’s important to recognise that the outbreak of war in the Middle East has had a profound human impact on those in the region, with many lives sadly lost. Although today I will be focusing on the macroeconomic implications of the conflict, this very real human impact should not be overlooked. Much about the current energy shock remains uncertain – especially its duration. But even if the war ends today and the Strait of Hormuz reopens fully and immediately, the macroeconomic impact will continue to be felt over the coming year. As a negative supply shock, the war in the Middle East will push up on inflation and down on activity, putting central banks in an awkward position of trading off supporting price stability with supporting output. Traditionally, monetary policymakers have tended to look through such shocks – there is nothing the BoE’s Greene: The case for rate hikes grows as the Iran war drags on. BoE’s Greene: Risk of acting is less severe than the risk of failing to act.

      Hammack: It Takes Two to Make an Economy Go Right
      Submitted 42 hr ago      |From clevelandfed.org|3 comments

      Thank you, Baiju, for that kind introduction. And thanks to the 50 Club of Cleveland for kicking off the discussions to make this event a reality, to the Greater Cleveland Partnership, for helping organize this event with us, and to the City Club for hosting us today. I am going to start by looking back at history—my own. As an aspiring history and economics major in high school in the late 1980s, I myself might qualify as ancient history at this point. But I want to take you back to 1988: Ronald Reagan was president, you may have been carrying around a pager, and Browns’ quarterback Bernie Kosar was featured on the cover of Sports Illustrated. A hip-hop song called “It Takes Two” by Rob Base and DJ EZ Rock was playing on the radio. If you didn’t hear, Rob Base passed away recently, so this song has been top of mind. In case you need a reminder, the refrain goes, “It takes two to make a thing go right. It takes two to make it outta sight.” I apologize for my singing voice and my questionable taste in music. And because I’m pretty sure the musical preferences of my colleagues on the Federal Open Market Committee are substantially better than my own, I’ll point out that these are only my views, musically and otherwise. What I’m not going to apologize for is that song playing on a loop in your head for the rest of the day, because I want you to use it to re FED'S HAMMACK SAYS IT MAKES SENSE TO KEEP INTEREST RATES UNCHANGED DUE TO UNCERTAINTIES. FED OFFICIAL HAMMACK EXPRESSES MAIN CONCERN ABOUT INCREASING RISK OF LONG-LASTING INFLATION PRESSURES. Fed's Hammack: Worried monetary policy may not be tight enough to lower inflation. Fed's Hammack remains firmly committed to getting inflation back to 2%.