Fed's Waller, Logan, and Goolsbee presented perspectives that collectively leaned towards a cautious approach to monetary policy adjustments, indicating a generally dovish stance. Overall, the bankers' remarks reflected a preference for a careful, measured approach to monetary policy, aligning more with dovish sentiments. Below are the highlights from each of the speeches:
Waller:
- Emphasized that the pace of balance sheet reductions will be independent of policy rate changes.
- Noted that the current overnight repo usage of around $500 billion indicates that the Fed can continue reducing its holdings for some time.
- Expressed a preference for the Fed's Treasury holdings to shift towards a larger share of shorter-dated securities.
Logan:
- Advised that moving more slowly in the current environment could reduce the risk of a premature stop in monetary policy adjustments.
- Hasn't observed a reduction in reserves yet under the current Fed Quantitative Tightening (QT).
- Pointed out that after draining the Overnight Reverse Repo (ON RRP), QT will reduce reserves on a one-for-one basis.
Goolsbee:
- Stated uncertainty about where interest rates will settle.
- Noted that if inflation continues to fall, the Fed should consider the impact on employment.
- Believes the current Fed funds rate is quite restrictive.
- Emphasized the need to monitor housing inflation.
- Speculated that January's inflation might have been an anomaly.
- Commented on the unusual nature of housing inflation.
The US dollar index halted its rise at the 61.8% Fibonacci, retracement of its most recent downward move. Today, the USDIDX is losing almost 0.20%. The declines accelerated after the publication of the ISM data, which were significantly worse than expected and revived speculations about faster interest rate cuts.
Source: xStation 5
