It's been slow going from the Fed chair thus far:
Markets have been digesting an unusually challenging set of circumstances
- Enormous benefits of having the dollar as the reserve currency
- Asked about recent USD weakness, says markets have been digesting an unusually challenging set of circumstances
- He is open to possibility that tariff translation to inflation could be more or less than anticipated
- The bond market is functioning well
- Waiting to see what shows up in measured inflation
- Tariffs might well be a one-time inflation event
- If we make a mistake on tariff inflation, people will pay the cost for a long time
- Not seeing stagflation now, it's not the base case
- If there were stagflation it would put the Fed in a tough place
- Does not want to give a lot of forward guidance
- Makes sense to move slowly when there is more uncertainty, in most cases
- Economy growing, inflation is in a pretty good place
- Watching labor market very carefully
Powell's comments haven't had any market impact today.
The market is pricing in 60.6 bps of easing into year end.
This article was written by Adam Button at www.forexlive.com
