Fed's Harker
- Wants a gradual and methodical course of rates cuts
- Current monetary policy is in a good place, not overly restrictive
- End of easing cycle may put Fed funds around 3%
- Business contacts favor a predictable pace of cutting
- Fed rate cuts will likely ease housing sector pressure
- Unemployment likely to rise to just below 5%
- Continues to watch commercial real estate sectors
- Job market has now mostly normalized
The bolded is the real crux of the argument for me. 'Around 3%' is a broad range but it's a critical input to be thinking about for USD, especially as compared to other central banks who will go to 2% or lower. Then the question is: If the US economy slows to 1% with 1.9% inflation, will the Fed go below 3%?