Fed speakers: Inflation near target, but fiscal policy remains a challenge

Here's a summary of the key points from the speeches of Fed officials Goolsbee and Williams, from the perspective of inflation and future interest rate movements:

Austan Goolsbee:

• Commitment to 2% Inflation: The Fed is determined to achieve its 2% inflation target.
• Inflation Decline Due to Supply Chains: Improvements in supply chains have helped lower inflation without negatively impacting the labor market.
• PCE Inflation Near Target: Inflation measured by the PCE index has remained close to 2% for the past six months.
• Impact of Fiscal Policy on Inflation: Government actions (fiscal policy) can influence inflation and will be taken into account by the Fed.

John Williams:

• Expectation of Inflation Falling to 2%: Williams predicts that inflation will fall to 2% in the coming years.
• Interest Rate Cuts and Supply/Demand Balance: Previous interest rate cuts were possible due to improvements in the balance between supply and demand.
• Data-Dependent Monetary Policy: Decisions regarding interest rates will be made based on incoming economic data.
• Uncertainty Related to Government Policy: Government actions are a major source of uncertainty for future monetary policy.

Summary:

Both Fed representatives signal a determination to pursue the 2% inflation target. Goolsbee emphasizes the role of supply-side factors in the recent decline in inflation, while Williams points to the dependence of future interest rate decisions on economic data and government policy. It can be inferred that the Fed will closely monitor data and, depending on its development and government actions, will make decisions regarding interest rates, striving to stabilize inflation at 2%. It's worth mentioning that Goolsbee comes across as quite dovish and sees potential for further rate cuts. On the other hand, from Williams' side, much uncertainty can be heard, especially in relation to future fiscal policy.

It is important to note a significant shift in the dollar's situation. EURUSD began to lose value significantly from the beginning of the US session and reached a local low around 5:30 PM CET, when information emerged about reaching a ceasefire agreement in the Gaza Strip. Currently, EURUSD remains below 1.0300.