January 29, 2025 at 07:38PM
I have had no contact with the President
Policy is less-restrictive than when we began cutting
We don’t need to see further weakening of labor market to achieve our inflation goal
Assessment on policy hasn’t changed, policy is well-positioned
We did some ‘language cleanup’ in the opening statement, removal of reference on ‘progress towards inflation goal’ was not meant to send a signal
Dovish comment there in the headline has hurt the dollar but it quickly bounced back because it initially wasn’t clear about whether he was talking about policy now or when he started cutting. He later clarified that he was talking about the restrictive nature of policy when they started cutting. However a second leg of recovery came when he said the removal of the line around progress towards the inflation goal wasn’t meant to send a signal.
We’re on hold and waiting to see what ‘comes down’ in terms of government policy
We want to see further progress on inflation, we think we see the pathway for that to happen
We now do see OER coming down steadily
We’ve also seen ‘non-market’ prices stubbornly high
We seem to be set up for further progress on inflation, we are going to want to see it
This is another dovish signal, highlighting confidence from the Fed that there is some disinflation still in the pipeline.
You can’t know where neutral is
We are above pretty-much everyone’s estimate of neutral
Our policy is affecting the economy and we see meaningful effects
It’s appropriate that we ‘not be in a hurry’ to make further adjustments
AI is a big development for the stock market but we are focused on macro economy
This article was written by Adam Button at www.forexlive.com.