Kansas City Fed president, Jeffrey Schmid and St. Louis Fed president Alberto Musalem commented in US monetary policy and its future perspectives. Overall, both Fed members speeches were quite cautious, Fed's confidence in further inflation fall probably didn't change, however recent CPI reading do not point to 'aggressive rate cuts cycle' stance, with still higher both headline and core.
Fed Schmid
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile app- The baseline of interest-rate cost appears to be higher than people thought a year or two ago.
- It remains to be seen how much more the Fed will cut rates, and where they may settle.
- Fed rate cuts to date are an acknowledgement of growing confidence inflation is on the path to 2% goal.
- I hope productivity growth can outrun the effects of slowing population growth, and rising fiscal deficits.
- I won't let enthusiasm over rising productivity get ahead of data or commitment to reaching the Fed's goals.
- I expect the economy to grow closer to 2% rate going forward.
Fed Musalem
- It is hard to derive much signal from the most recent jobs report; low number clouded by storm and other impacts.
- Monetary policy is restrictive, but financial conditions overall are supportive of economic activity.
- I am attuned to the risks of rising layoffs, though disorderly deterioration of the labor market is unlikely given the health of businesses.
- Core consumer price index and core personal consumption expenditures price index remain elevated.
- The pressure in services industries is slowly abating.
- Monetary policy is well positioned, the Fed can judiciously and patiently judge incoming data to decide on further rate cuts.
- Further rates easing may be appropriate if inflation continues to fall.
- Monetary policy is to remain appropriately restrictive while inflation remains above 2%.
- The labor market remains in the range of full employment.
- Strong economy on track for a solid fourth quarter.
- Growth is broad-based and driven by consumption, income growth, productivity, supportive financial conditions, and wealth effects.
- Recent high productivity could prove durably structural, but that remains uncertain.
- The business sector is generally healthy, though the smallest businesses and those in the consumer discretionary market is seeing slower earnings growth.
- Recent information suggests that the risk of inflation moving higher has risen, while risks to the job market remain unchanged or have fallen.
- The US central bank may be on the last mile to price stability, inflation is expected to converge to the 2% target over the medium term.
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
