Fed George: Calls for 'more measured' pace of rate hikes

Reuters reported that the Kansas City Federal Reserve President Esther George on Thursday reiterated her support for a slower pace of US interest rate increases, calling for a "more measured" approach that allows the central bank time to judge how the rises in borrowing costs are affecting the economy.

"I continue to see several advantages for a steady and deliberate approach to raising the policy rate," George said in remarks prepared for delivery to an energy conference co-hosted by her regional bank and the Dallas Fed.

Key quotes

"Without question, monetary policy must respond decisively to high inflation to avoid embedding expectations of future inflation."

"A more measured approached to rate increases may be particularly useful as policymakers judge the economy's response to higher rates." 

"As the tightening cycle continues, now is a particularly important time to avoid unduly contributing to financial market volatility, especially as volatility stresses market liquidity with the potential to complicate balance sheet run-off plans." 

"The degree of tightening necessary will only be determined by observing the dynamics of the economy and inflation and cannot be predetermined by theory or pre-pandemic benchmarks." 

US dollar update

Meanwhile, the greenback has crumbled below a key level of daily support on the DXY index, measuring the currency vs. a basket of currencies:

Should investors be of the mind that even when Fed policy rates peak, that they are likely to remain higher for longer, then the greenback could be seen as a discount near the upper quarter of the 107 area as illustrated above. The M-formation is also a reversion pattern so the resistance could be revisited in the coming days.