St Louis Fed chief James Bullard and Cleveland Fed chief Loretta Mester commented hawkishly on the US monetary policy situation, signaling a possible 50 bp hike in March. As a result, the market is pricing a 50bp hike in March with more than 18% probability. Yesterday's US PPI producer price reading was the highest since June 2022.Â
Fed Bullard
Kezdjen befektetni még ma, vagy próbålja ki ingyenes demónkat
ĂlĆ szĂĄmla regisztrĂĄciĂł DEMĂ SZĂMLA Mobil app letöltĂ©se Mobil app letöltĂ©se- The latest data made markets realize that the fight against inflation will be a long one. I am not ruling out support for 50 bps at the March meeting;
- At the last Fed meeting, I advocated a 50 bp hike to get to an appropriately restrictive level sooner;
- The economy is growing faster than previously thought, unemployment is lower than expected and output is above potential. Growth should moderate and unemployment should return to normal;
- Market inflation expectations are now relatively low but the Fed risks a repeat of the 1970s if it fails to bring inflation down soon;
- I currently see a target interest rate in the range of 5.25% to 5.5% as appropriate.Â
Fed Mester
- There is no need to cut rates this year and the main focus is now on raising rates. The Fed has more work to do to control inflation;
- Further inflation surprises may make Fed to tighten policy more aggressively, pace of hikes may accelerate;
- There was already a compelling case for a 50 basis point hike at the last FOMC meeting;
- It is not yet certain that the Fed will have to raise interest rates by higher amounts at the next FOMC meeting;
- Recent data show that demand in the economy is not softening as we expected. I expect further balance sheet reduction;
- A recession would not be good, but it could happen.It could be a year before we see the full effects of rate hikes;
- The Fed has no intention of changing its 2% target, how far rates will rise above 5% is depends on data.
The US dollar strengthened against other currencies. The USDIDX dollar index rose above 104.4 points. The SMA100 average (black line) is approaching the intersection of the SMA200 (red line) from below, forming a bullish golden cross formation. We can see also bullish 'three white soldiers' H4 candlestick formation.
Source: xStation5
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