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Comments from the Fed Chairman in Dallas
- Economy not sending signals that Fed needs to be in a hurry to lower rates
- Moving policy over time towards neutral; policy isn't pre-set
- Expects inflation to continue to come down on a 'sometimes bumpy' path
- Fed committed to finishing the job on inflation
- Economic strength gives Fed the ability to approach its decisions carefully
- Labor market is solid, inflation is on a sustainable path to 2%
- Recent US economic performance remarkably good
- Full text
This is hawkish stuff compared to market pricing; odds of a Dec cut are down to 67%.
We got a taste of this talk earlier in the week from other Fed officials and Powell is certainly validating it here. This is a change of tone from the FOMC press conference.
The US dollar is moderately higher on the headlines and there is some selling in equities and the front end of the curve.
Here is the quotable:
We are moving policy over time to a more neutral setting. But the path for getting there is not preset. In considering additional adjustments to the target range for the federal funds rate, we will carefully assess incoming data, the evolving outlook, and the balance of risks. The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully. Ultimately, the path of the policy rate will depend on how the incoming data and the economic outlook evolve.