Feds Lacker
  • There is a strong real spending growth
  • Wage growth is still not consistent with a 2% inflation rate
  • Does not see inflation expectations coming down to be consistent with 2% inflation
  • No signs of recession, but not confident inflation will fall far below 3%
  • Reasonable to expect 2 to 3 rate cuts in 2024
  • Fed should avoid declaring victory on inflation
  • Fed needs to reestablish credibility and re-anchor inflation expectations
  • Expects the Fed to be adverse to cutting rates too soon
  • At the end of the day it's about inflation numbers and then coming in close to 2%
  • if inflation numbers come in around 3% for a year, the Fed will need to think about taking stronger action
  • Looking at initial claims and vacancies as a part of employment, and things look fine with regard to the labor market