Fed officials spent the past week discussing Jay Powell’s stance in his last press conference. Powell said it will take longer for higher rates to go away. Through speeches and interviews, different Fed officials talked about their intention to reach new monetary policy cautiously. This is mainly due to the higher-than-anticipated inflation earlier this year and understanding any changes in the months ahead.
What the Fed Officials are Saying?
John Williams from the New York Fed thinks that policy is currently in a good position. Neel Kashkari from the Minneapolis Fed said that it is more probable that they will remain where they are for an extended period. Austan Goolsbee from the Chicago Fed said that they are waiting for now.
Esther George, the former president of the Kansas City Fed, said that Fed officials may wait longer for higher rates to come down. She believes that if data continues to improve, the first rate cut could come in September, despite the upcoming presidential election. According to George, there is a possibility of two rate cuts this year but also the chance of no cuts at all.
Former St. Louis Fed president James Bullard said that if there is good news about inflation soon, discussions about when the first rate cut might happen will restart. He thinks a first cut in December is possible but also suggests that the Fed officials could justify a cut now as long as they do not commit to any further cuts.
Not all Fed officials share the same outlook. Bowman does not foresee any rate cuts this year due to inflation. On the other hand, Kashkari said a hike might be possible if inflation comes near 3%. Goolsbee shifted his view after three months of higher inflation, questioning whether the economy is overheating. He talked about the need to wait and see how things unfold.
Release of Reports
After their meeting on May 1, the Fed officials maintained the benchmark interest rate between 5.25% and 5.50%. This benchmark interest rate has been the highest in 23 years. In their recent policy statement, the Fed officials interest-rate-setting committees said a lack of additional progress towards their 2% inflation goal in recent months.
The Consumer Price Index (CPI) for April will also be released this week. Economists said a slight improvement with the core CPI, which excludes volatile food and energy prices, is expected to decrease from 3.8% in March to 3.6%.
All the Fed officials and investors are keeping a close eye on inflation and the upcoming release of the Consumer Price Index (CPI). The report will provide insight into whether price pressures persist in the economy.
This week, Federal Reserve Chair Jerome Powell will speak at an international conference, and other Fed officials will also deliver speeches. The Fed has discussed the need for clear evidence that inflation is being managed before considering a cut to its benchmark interest rate. On Wednesday, the US retail sales report and the CPI report will also be released.
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