- We are committed to getting inflation back to 2% on a sustained basis
- There is tension between our two objectives
- We haven’t really seen the downside risks to a large balance sheet
- Policy in a good place to wait and see how current situation plays out
- Tariffs likely a one-time increase adding between 0.5% and 1.0% to inflation
- Tendency is to look through supply shocks but must keep an eye on inflation expectations
- Monitoring inflation expectations very carefully, appear to be well anchored
We are getting close to the point where Powell is a lame duck. He still has two meetings as Chair and we don’t know if he will stay on as Governor but Warsh’s words (if he ever speaks) will carry more weight going forward. The Fed funds futures market is pricing in a small chance of rate cuts late this year after pricing in a 50% chance of a hike at one point last week.
More:
- We don’t know what the effects of the current situation might be
- Reiterates the importance of vigilance
- AI is making people more productive
- I’m very optimistic about the medium and long term
- There’s no denying it’s a challenging time to enter the labor force
- We do not see contagion from private credit right now
- Doesn’t have the makings of a broader systemic event right now
This article was written by Adam Button at investinglive.com.
