Recent dots show a fair amount of dispersion in opinion at the Fed.The range of views about the path forward and debate over neutral is robust.The Fed is not in mad dash to neutral, in favour of not rushing to judgement or assuming the job is done on inflation.As long as consumer spending continues, there will be demand for products and therefore for workers.I do not expect to see unemployment increase much further.I expect demand will continue to sustain employment.The labour market is not flashing red. I am optimistic about the future.Higher supply has contributed to the rise in unemployment.I expect some choppiness on inflation going forward, will wait and see what is needed on rates.If the labour market deteriorates that is a reason for a faster pace to neutral, but that is not the base case.Long-run inflation expectations remain relatively stable.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
