Speeches by Fed members are underway, what do we know so far?

The Federal Reserve members' stances are generally hawkish, emphasizing a cautious approach to inflation control and economic stability. Here is a short summary:

Patrick Harker

• Harker, President of the Federal Reserve Bank of Philadelphia, expressed his preference for maintaining the current interest rate levels. He believes this approach will allow the impacts of previous tightening measures to work through the economic system.

• Harker emphasized the importance of observing a decrease in inflation. He noted that early signs of inflation moving down are being observed, but he wants to keep rates unchanged for now and make decisions about future actions later.

• Harker stated his belief that the current policy stance is restrictive, implying that interest rates are relatively high. He mentioned that this stance aims to apply pressure on the economy to slow down inflation.

• When asked about the timing of rate cuts, Harker indicated that rate cuts are not likely until next year at the earliest. He underlined the data's role in dictating the appropriate timing for such actions.

• Harker mentioned that the current stance involves both maintaining higher interest rates and shrinking the balance sheet, which removes accommodation from the monetary policy. He expects policy to remain steady throughout the rest of the current year, with a possibility of rate cuts if inflation decreases more quickly than anticipated.

Loretta Mester

• Mester, President of the Federal Reserve Bank of Cleveland, expressed concern about core inflation remaining elevated. She emphasized the need for consistency in bringing inflation down to the target level of 2%.

• Mester acknowledged that more work is required to address inflation. She emphasized the importance of being cautious and avoiding both overtightening and undershooting in the pursuit of inflation control.

• Mester noted that the current policy stance is already restrictive. She posed two key questions: whether further rate increases are necessary and how long restrictive policies need to be maintained to ensure inflation returns to the 2% goal.

• Mester's outlook has not significantly changed since June. She previously projected two more rate increases for the current year, one of which has already been implemented, and she does not foresee any rate cuts in the coming year.

Austan Goolsbee

• Chicago Fed President Austan Goolsbee emphasized that he sees a feasible path to reducing US inflation without causing a significant recession. He referred to this as a "golden path."

• Goolsbee mentioned that despite the need for more incoming data, there have been no recent developments in the past two months that have convinced him the "golden path" is unattainable.

• Inflation Target and Policy: When asked about the possibility of changing the Fed's inflation target from 2%, Goolsbee expressed his hesitation. He believes that the current inflation rate is still too high, indicating discomfort with declaring victory prematurely. He stated that the inflation target should not be changed until it is actually achieved.

• Goolsbee acknowledged that while annual price growth has slowed, inflation is not yet fully down to the target level of 2%. He emphasized the importance of hitting the established target before considering any adjustments.

US500 is still struggling to find direction at the end of today's session. Markets probably anticipated more announcements about upcoming rate cuts; however, there is an unchanged stance from central bankers regarding the need to combat inflation.