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[Quick Facts]

1. Rosengren: The Fed can stop hiking rates if the economy slows at the current pace.

2. Centeno: ECB needs to be very cautious about further tightening.

3. U.S. Q2 GDP growth is revised down, but its economic momentum may increase.

4. U.S. ADP hits a 5-month low.

[News Details]

Rosengren: The Fed can stop hiking rates if the economy slows at the current pace

The Federal Reserve can end its interest rate hiking cycle if the labor market and economic growth continue to slow at the current gradual pace, said Eric Rosengren, the former president of the Boston Fed. However, interest rate cuts are unlikely to be on the table until core PCE falls "closer to 3% than 4%," Rosengren added.

Centeno: ECB needs to be very cautious about further tightening

The European Central Bank (ECB) needs to be very cautious about further tightening because economic growth in the euro area has been weaker than expected in recent months and many measures have already been taken, said Mario Centeno, ECB Governing Council member. Centeno didn't express his attitude toward the September meeting, but he said it would be a mistake to conclude the rate-hiking cycle is over even if the central bank pauses rate increases.

U.S. Q2 GDP growth is revised down, but its economic momentum may increase

U.S. economic growth for the second quarter was revised down to 2.1% year-on-year, but it remained strong. Momentum appears to be building in the early third quarter as a tight labor market supports consumer spending.

The downward revision reflects lower inventory investment and less spending on business equipment and intellectual property products. The U.S. economy is growing at a much higher rate than the non-inflationary growth rate of about 1.8% that Fed officials believed. This increases the risk that interest rates will remain high for some time, but the slowdown in inflation has made the market increasingly optimistic that the Federal Reserve may have ended the rate hikes, and a "soft landing" may be achieved. Currently, economists raise their forecast for the U.S. economic growth in the third quarter to 5.9%, although this may have exaggerated the degree of U.S. economic health.

U.S. ADP hits a 5-month low

The U.S. ADP employment increased by 177,000, hitting a 5-month low, compared with the previous reading of 371,000. This further shows a slower labor demand.

The sectors that saw the most employment growth were education and health services, as well as trade and transportation. Hiring in the leisure and hospitality sectors was the slowest since March 2022.

The last four ADP reports have been above market consensus, and this resilience has come against a backdrop of still sticky wage growth. In the private sector, the wage is growing at twice the rate of the overall CPI. In other words, while the U.S. labor market is slowing, it still has a way to go before the unemployment rate rises significantly. Don't read too much into a single piece of data.

[Focus of the Day]

UTC+8 15:15 Atlanta Fed President Bostic delivers a speech

UTC+8 15:15 Peel, chief economist of the Bank of England, delivers a speech.

UTC+8 17:00 Eurozone HICP (Aug)

UTC+8 19:30 The European Central Bank publishes the minutes of its July monetary policy meeting

UTC+8 19:30 European Central Bank Executive Member Schnabel delivers a speech

UTC+8 20:30 U.S. Weekly Initial Jobless Claims (SA)

UTC+8 20:30 U.S. PCE (Jul)

UTC+8 21:00 Boston Fed Chairman Collins delivers a speech.

UTC+8 00:00 Next Day: ECB Vice President Guindos speaks