Goolsbee
- Nice to get inflation number that is better than expected
- There is more uncertainty noise
- Still on path to get to 2% inflation.
- Today stations recent ferment was a bump.
- Next 12 to 18 months, rates can go down a paramount.
- Employment is stable, want to keep it stable, to do so rates need to come down to something like neutral.
- Agree policy rate is still far from neutral rate
- The Fed is significantly less restrictive than we were
- The neutral rate is around 3%.
- Our goal is to get inflation down to 2% and incomes would rise faster than the prices
- Anything that will impact jobs and prices we try to process
- When the new administration is in, we will process what policy does for inflation and employment
- Uncertainty on policy as part of why I feel rate path next year is a bit more shallow.
- Rates will come down by a judicious amount next year
- Rate path will be determined by employment and prices
- We might be more dependent on data and the conditions and the economic outlook
- If look at the dot plot, what is the long run neutral rate is below the level today.
- The last 6-months of PCE inflation is very close to 2%
- Recent inflation has been higher than expected, for sure bumps can happen and policy uncertainty, but its clear inflation is heading toward 2%.
US stocks are now higher on the day with:
- Dow up 0.84%
- S&P up 0.70%
- NASDAQ index up 0.60%
The small-cap Russell 2000 is now up 1.06%.
Looking at the US debt market
- 2 year 4.293%, -2.6 basis points
- 5 year 4.362%, -6 1 basis points
- 10 year 4.516%, -5.4 basis points
- 30 year 4.710%, -3.2 basis points
