- If inflation stays above target, have to be careful when going about reducing rates
- But if unemployment accelerates, it makes the case to be more forward-leaning
- Upcoming decisions will depend on the data
- The economy right now is “quite prosperous”
- Recent policy moves can be described as a “recalibration”
- Questions on the pace of further reductions would be more relevant once Fed moves to “normalisation” phase
- We’re somewhat more vulnerable to cost shocks on the inflation side
- Can see why businesses are concerned about possible inflationary effects from tariffs
- But Fed should not preemptively adjust policy ahead of possible economic policy changes
- Full transcript (may be gated)
Again, he’s not really giving anything away before the decision next month. But the part about not wanting to preemptively make any sudden changes to policy settings ahead of possible Trump policies would mean that he’s comfortable with the current path that the Fed is on. That’s the way I would read this at least.
This article was written by Justin Low at www.forexlive.com.
