Reuters came out with the statements from Fed Governor Philip Jefferson and St. Louis Fed President James Bullard during the weekend, who spoke at a monetary policy conference at the Hoover Institution on Friday. While both the policymakers tried to defend the current monetary actions of the US Federal Reserve (Fed), their inflation outlook keeps the US Dollar buyers hopeful.
Is inflation still too high? Yes.
Has the current disinflation been uneven and slower than any of us would like? Yes.
But my reading of this evidence is that we are 'doing what is necessary or expected of us,’ which is the dictionary definition of being on track.
Feel the full effects of our rapid tightening are still likely ahead of us.
The string of regional bank failures probably will have only a mild tightening effect on credit conditions.
I find encouraging the recent stablization of inflation expectations near the Fed's 2% target.
The prospects for continue disinflation are pretty good.
Since then the Fed's rate hikes have helped bring down what had been a worrying rise in inflation expectations that, if left unchecked, could have sent actual inflation spiraling out of control.
Monetary policy is now at the low end of what is arguably sufficiently restrictive given current macroeconomic condition.
The bad news for the hawks in the room is, you are barely in the zone" of restrictive-enough policy.
Also read: EUR/USD licks its wounds around 1.0850 with eyes on EU economic projections, US debt ceiling talks
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