The Fed should proceed with more caution on interest rate cuts than was called for at its September meeting
My baseline calls for a gradual rate cut over the next year
The policy rate is currently restricted.
If the economy continues as expected, policy can be moved to a neutral position at a measured pace.
If inflation falls below 2%, or the labor market deteriorates, in a less likely case, the Fed could cut interest rates in advance.
If inflation rises unexpectedly, the Fed may pause interest rate cuts.
The latest inflation data is disappointing.
The economy is on a solid foundation, and may not slow down as much as desired; We expect GDP to grow faster in the second half of 2024.
Family resources for future consumption are in good condition.
Consumers are eager to make expensive purchases as prices fall, with pent-up demand.
The labor market is very healthy, and labor supply and demand have become balanced.
Hurricanes and a Boeing strike could cut October payroll growth by 100,000.
Looking ahead, we expect payroll gains to moderate, and the unemployment rate to rise but remain historically low.
Monitor inflation data to see how long the recent rise continues; Progress on inflation has been volatile.
The bond market is closed today for the Columbus Day holiday. Although he was disappointed in the inflation data and described the labor market as quite healthy, he still sees the Fed continuing to gradually lower interest rates over the next year. It also keeps the door open for the Fed to ease or accelerate policy given the turnaround in the economy.
USDJPY fell, but remains above last week’s high of 149.55, and above the high dating back to mid-August at 149.356. The current price is trading at 149.75 after reaching 149.974.
Comments are closed, but trackbacks and pingbacks are open.