- Expect to see some cooling of the economy over time
- We are getting mixed signals on the economy
- Our number one challenge is getting inflation down
- There's a fair amount of uncertainty
- We could see labor market demand coming down without much softening
- We're going to do what's necessary to bring inflation down
- The economy has a lot of momentum
- Business and household balance sheets are in a very healthy position
- I want to see a consistent series of declines in core inflation
- There's room for margins to compress and for businesses to bring down markups
- We're in a very unusual period so it's tough to predict when inflation will come down but I have confidence in our tools to get it done
- 50 bps market pricing seems like a reasonable path
- Getting out to September it's tougher to say, we'll have four more jobs and inflation prints by then
- If we don't see a deceleration in monthly inflation prints, then it might well be appropriate to have another 50 bps hike
- It's tough to see the case for a Sept pause now
Brainard slammed the door on the idea of a pause in September. That's given a bit of a lift to the dollar but a pause was a low probabiltiy anyway. Keep an eye on yields, US 2s are up 0.6 bps to 2.66% after touching 2.625% earlier.