FED: Richmond's Barkin: "Will See What Happens" On Cuts
Richmond Fed Pres Barkin (leans hawk, non-voter) tells Bloomberg TV that he is "open minded" in his approach to policy and retains a data-dependent approach to the next Fed move, but overall suggests that the easing bias remains. Put another way, he is yet another Fed speaker who since the January FOMC has expressed very little urgency to cut rates in the near future, or even at all this year.
- Asked if tariff impact would delay the Fed from cutting rates, Barkin says "there's a lot of uncertainty" on the policy outlook and it's hard to know what is happening with growth and inflation "until you get more clarity".
- Says "the case for wait and see is, you want to wait and see." "On whether the Fed will cut at some point this year, "we will see what happens."
- On whether the Fed could hike rates "I never take anything off the table... you have to see an economy overheating and I don't see signs of an economy overheating. I see inflation coming down, I see the job market stabilizing...but we have the JOLTS data that seems to have come down."
- Says that policy is "moderately restrictive...I don't think we are hugely restrictive" but if the economy "comes back strong, you have to ask questions about how restrictive you really are."
- He notes that the last set of FOMC projections suggests a "lean toward cutting", but asked whether he was equally open to hiking, "that's another way to ask the exact same question - let's see what happens."
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MNI: GERMANY DEC FLASH HICP 0.7% M/M (0.5% FCST)
- MNI: GERMANY DEC FLASH HICP 0.7% M/M (0.5% FCST)
- GERMANY DEC FLASH HICP 2.9% Y/Y (2.6% FCST)
EGB FUNDING UPDATE: Netherlands 2025 Borrowing Requirement Update
DSTA notes the borrowing requirement for 2025 is now estimated at 106.4 billion (€1.4 billion higher than the previous estimate). The higher overall borrowing will be funded in full by an increase in money market issuance.
- "The call on the capital market remains unaltered at € 40 billion."
- The borrowing "estimate is surrounded by uncertainty due to several factors in the government finances. Historically, this has led to a lower funding realization at the end of the year compared with the announcement in the beginning of the year."
AUSTRIA: Pres. Tasks Far-Right Leader w/Forming Gov't After Chancellor Resigns
President Alexander van der Bellen has confirmed that he is tasking leader of the far-right Freedom Party of Austria (FPO) Herbert Kickl with forming a coalition gov't. Van der Bellen says Kickl will report back to him as he holds talks with the conservative Austrian People's Party (OVP). This is the second time that Kickl has been given the mandate to seek to form a gov't after the FPO won a plurality of seats in the September 2024 federal election. Then, the OVP refused to engage in talks as the FPO insisted that Kickl would come in as chancellor.
- However, OVP chair and Chancellor Karl Nehammer announced his resignation over the weekend. The collapse of tripartite talks involving the OVP, centre-left Social Democrats (SPO) and the liberal NEOS, was the first sign that a moderate gov't might not be possible. This was followed by the OVP and SPO proving unable to continue in two-party talks, sparking Nehammer's resignation.
- It had been seen that an FPO-OVP gov't would not be possible with both Kickl and Nehammer leading their respective parties. The resignation of Nehammer could therefore set the stage for a right-wing gov't to come to power in Vienna. The other options include a tripartite gov't involving the OVP, SPO and Greens (very unlikely following the political upheaval of the weekend) or snap federal elections if no stable gov't is feasible.
