St. Louis Federal Reserve Bank President James Bullard said tamping inflation may require the central bank to move its benchmark interest rate above its neutral target rate -- which he believes is around 2 percent -- above. "If you want to put downward pressure on inflation, you actually have to get to neutral -- or beyond," Bullard said Thursday at an event hosted by Columbia University and SGH Macro Advisers in New York. "I think that's one of my The main concern -- we can't do it now, but we have to be able to do it in the future" in case inflation is not as benign as expected. Bullard reiterated his view that the all the Reserve is supposed to raise interest rates by a cumulative 100 basis points by July 1 and begin shrinking its balance sheet in the second quarter in response to the fastest inflation in 40 years.

Reuters, citing a draft text and unnamed diplomats, said the lifting of sanctions on Iran's oil exports would not take place until a later stage of the nuclear deal. The first phase of the agreement involved a moratorium on Iran's enrichment of uranium above 5 percent. In addition, the first phase also includes the release of frozen reserves of Iranian oil funds, including funds in South Korea. The easing of most other U.S. sanctions on Iran will come at a later stage.

U.S. initial jobless claims rose unexpectedly last week, the first increase since mid-January, concentrated in a handful of states in the South and Midwest, while others fell. Initial jobless claims rose by 23,000 to 248,000 in the week ended Feb. 12, Labor Department data showed on Thursday. This data is of particular interest to the market as it overlaps in part with the February nonfarm payrolls report due early next week. The median estimate of economists polled by Bloomberg was 218,000. The rise in jobless claims was largely driven by higher jobless claims in Missouri, Ohio and Kentucky. However, this data itself fluctuates quite a bit. Continuing jobless claims fell to 1.59 million in the week ended Feb. 5. Unadjusted initial jobless claims rose to 238,482 last week.

ECB chief economist Philip Lane said the central bank must be careful not to overreact to the recent high inflation, which could cause inflationary pressures to become too low. In a video event hosted by the MNI on Thursday, Lane said it was crucial to prevent "excessive monetary tightening that would sustain inflation below the 2% target over the medium term". But in order to achieve their goals, policymakers cannot be too lenient with emerging market risks. The debate over how to exit crisis-era stimulus has intensified since ECB President Christine Lagarde explained earlier this month that a rate hike in 2022 should not be ruled out. Lane's comments were in line with central bank governor Pablo Hernandez de Cos, who earlier on Thursday said officials should not "overreact" and called for a "clear, gradual and predictable" policy path. And some of their colleagues are more keen to end asset purchases and follow in the footsteps of the Bank of England and the Federal Reserve in raising interest rates as early as this year.

The International Monetary Fund (IMF) warned that supply chain disruptions largely affected economic growth in the euro zone last year and posed a test for the European Central Bank as the virus outbreak is likely to continue into 2023. "The prospect of a prolonged supply bottleneck poses challenges for monetary policymakers," the Washington-based International Monetary Fund said in a report on Thursday. "Despite a brief uptick in inflation due to factors such as supply disruptions and soaring energy prices, keeping inflation expectations stable over the medium term is key." In a blog post summarizing the findings, IMF Managing Director Georgieva and authors Oya Celasun and Alfred Kammer said supply chain shocks are mostly temporary at the moment, and wages are likely to rise only modestly.

China has stepped up efforts to cool iron ore prices, requiring major iron ore trading companies to release inventories and cooperate to check whether there is hoarding. On Thursday, the National Development and Reform Commission called 10 international and domestic trade giants, including Glencore and Trafigura, to Qingdao for a meeting. The government stepped up its crackdown, citing speculation as the reason for the surge in iron ore prices, which could trigger a new round of inflation. According to the announcement issued by the National Development and Reform Commission, some iron ore trading companies are required to release "excessive inventory" and provide detailed information on recent inventory changes and transaction prices. The National Development and Reform Commission is investigating whether there are illegal acts such as hoarding and price gouging.

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