John Williams, president of the New York branch of the Federal Reserve, commented today on the US economy and monetary policy. Williams forecasts interest rate cuts later this year, but stressed that inflation has begun to negatively surprise policymakers. USDIDX futures on dollar index erased some of the dynamic gains and contract is currently losing 0.07%.
- The US economy is now in a good place. However, I don't know what's ahead for US monetary policy
- It's better to focus on the inflation trend, because recent data was disappointing.
- Inflation fell faster than expected last year, but the process of lowering it has encountered some obstacles.
- The US economy has benefited from positive supply shocks. I see "a lot of uncertainty" about the economy.
- Inflation is approaching 2%, but I expect further jumps. However, Fed has made "significant progress" in bringing inflation down.
- The risk between inflation and unemployment is approaching a better balance. Inflation this year will be probably at 2.25-2.5% level
- I expect the unemployment rate to rise to 4% this year, and inflation to return to 2% next year. US GDP is likely to grow by 2% this year.
- Inflation in rents is very strong, but I don't see signs of a bubble; also the labor market remains strong.
- A slowdown in balance sheet reduction does not mean the whole process is over. The data suggest that reserve levels remain high.
- The overall outlook is uncertain; the Fed must be data-dependent.
- Commercial real estate is a concern; it will take some time to resolve. But I see no risk of an overall financial stability crisis from commercial real estate.
- Monetary policy is well positioned to meet the Federal Reserve's policy target
USDIDX (H1 interval)
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile appThis content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
