FOMCs Christopher Waller is speaking and says:
Fed should proceed with more caution on rate cuts than was needed at September meeting
My baseline calls for reducing policy rate gradually over the next year
Policy rate is currently restrictive.
If economy proceeds as expected, can move policy to a neutral stance at a deliberate pace.
If, in a less likely case, inflation falls below 2% or labor market deteriorates, the Fed can front-load rate cuts.
If inflation unexpectedly rises, the Fed could pause rate cuts.
Latest inflation data is disappointing.
Economy is on solid footing, may not be slowing as much as desired; expect GDP to grow faster in 2H 2024.
Household resources for future consumption are in good shape.
Consumers are eager to make big-ticket purchases as rates come down, with pent-up demand.
Labor market is quite healthy, labor supply and demand have come into balance.
Hurricanes, Boeing strike may reduce October payrolls growth by 100,000.
Looking ahead, expect payroll gains to moderate, unemployment rate to drift higher but stay historically low.
Watching inflation data to see how persistent recent uptick is; progress on inflation has been a rollercoaster.
The bond market is closed today for the Columbus Day holiday. Despite his disappointment in the inflation data and calling the labor market quite healthy, he still sees the Fed proceeding with rate cuts gradually over the next year. He also keeps the door open for the Fed to ease or speed up policy given the shift in the economy.
The USDJPY did move lower, but still remains above the high from last week at 149.55, and above the high going back to mid August at 149.356. The current price trades at 149.75 after trading as high as 149.974.
Looking at the US stock market,
The Dow is extending to a new high of 43111.45. It is currently up 227 points or 0.53% at 43091.S&P index is trading up 48.14 points or 0.83% at 5862.99. It reached a new all-time high of 5865.39.NASDAQ index is currently up 177.88 points or 0.97% at 18520.88. It’s high price from earlier today reached 18545.17. The NASDAQ index is within 0.69% from a new all-time high closing level.
This article was written by Greg Michalowski at www.forexlive.com.
