- Decision comes at a time when the economy appears to be strengthening
- I would be hard pressed to describe broad financial conditions as restrictive
- That view was widely shared
- Economy is resilient
- An attitude of optimism is what I heard in the FOMC in the past two days
- Labor side of Fed remit is ‘in good shape’
- Predominant focus is on price-stability
- The plain fact is that inflation is too high
- Summer data soes not tell me inflation situation has improved
- Too many categories are posting increases above 3% on 6 and 12-month basis
- Commodity prices bear watching and those have risen
- We must be confident that underlying inflation is moving to our target, FOMC decided the standard has not been met
- Says he didn’t submit dot plot/forecasts
- Inflation risks are to the upside while jobs risks are roughly balanced
- Most advanced economies are facing price pressures
Comments in the Q&A:
- I am not going to prejudge anyfuture decision
- We made this decision based on our assessment of the situation
- Trends matter, data points are noisy
- I was not waiting breathlessly on one data point
- In aggregate we are more or less at full employment
- We took action to achieve a “timelier return” to price stability
That’s the first line that really gets my attention. He’s doubling down on his view that inflation was already falling. That’s a hint that he doesn’t want to hike too many times and runs slightly against the hawkish market action in the aftermath of the decision.
- I see 3 reasons bond yields have risen: the first is economic strength, the second is competition for capital, the surge in capex is real, and the third is geopolitics.
No mention of deficits there.
- Today’s action shows we’re serious about achieving our target in a timelier fashion
The message certainly didn’t push back on the idea of another rate hike this year. We’re up to 33.2 bpd priced in this ear compared to 27 bps beforehand. For October, the hike odds are 55%.
