- We have to talk to people and find out where things are going
- We can live with recent inflation data, Fed should be patient on policy
- People are feeling alright
- I’m still feeling good about getting back to 2% inflation
- There will be an ‘art’ to deciding when to cut
- We will get to a point where the full range of data allows us to cut
- I like to look at the Dallas Fed’s trimmed mean, it’s been at 2.6% for months now
- My belief is that it will be time to start normalizing in the summer. If there’s more progress, I would be willing to move that forward
- I was at two rate cuts in the dot plot but I could move three “for sure”
- There’s evidence that productivity of US workers has improved
- Economy still has tremendous momentum
- Bankers telling him that customer balances are ‘about 50%’ compared to 100% during the pandemic
- Business leaders feel like they’ve gotten through the worst of the storm and they’re in a good place
- We need to make sure the economy is moving in the right direction
- Wage growth is continuing its downward trend to normalization
- if the economy performs well, I’m ok waiting to cut
The last comment is the dictionary definition of the ‘Fed put’.
“If you look at the dispersion of prices, almost one-third of the PCE basket has price increases over five per-cent. That’s 50 per-cent higher than what you would see ordinarily. So when you have lots of products that are showing lots of high price changes, it’s hard to think you’re there yet (on confidence to cut rates).”
This article was written by Adam Button at www.forexlive.com.