- I support another 75 bps in July. If retail sales and housing data come in "materially stronger than expected", I would lean towards a larger July rate hike
- I expect hikes to continue after July at a pace that's dependent on incoming data
- After July, further increases will be restricting demand
- I expect policy to be restrictive until there has been a sustained reduction in core PCE inflation
- A soft landing is 'very plausible' based on strong labor market
- Fed must be 'utterly focused' on inflation fight
- Very strong labor force data does not show weakening
- June inflation report a 'major league disappointment'
The retail sales report is due out tomorrow and it just got a whole lot more important. The consensus is for a 0.8% increase to headline and a 0.3% increase to the all-important control group.
As for housing we get NAHB index (Mon) housing starts (Tuesday), existing home sales (Wed). The consensus numbers aren't showing any deterioration, which is a surprise to me given some of the recent commentary.
Since his comments, the odds of 100 bps have fallen to 53% from about 68%. That's helped to lift risk assets and weighed on the dollar.
Here's the exact quote: "If that data come in materially stronger than expected, it would make me lean towards a larger hike at the July meeting."
More:
- Inflation expectations data before the next meeting will help shape my view on the size of the hike needed in July.=
"I pay attention to both surveys of the public's inflation expectations and measures of inflation expectations derived from trading of inflation-indexed securities. I prefer the latter market-based measures, which are down from recent peaks but still elevated. The Board staff combines various surveys and market-based measures in our Index of Common Inflation Expectations, which has moved up slightly in recent months after being flat for a long time. We need to avoid expectations rising so much that they become a factor that drives inflation higher."