Q&A Feds Kugler: Disinflation was rapid in the second half of 2023

Question and answer with Kugler has begun. She says:

  • This inflation was rapid in the second half of 2023
  • Inflation on 3-6 month basis as moved to 2% level
  • Wage growth moderation is key
  • Services ex-housing is one of the elements to be watched for continued declines
  • Housing inflation has been persistent but is expected to come down
  • Layoffs in US are spotty and not showing up in aggregate data
  • Immigration is helped in some sectors including construction
  • We need further moderation in wage data especially the service sector, but it is moderating and this filtering through to prices
  • Wage moderation needs to continue, though level that is consistent with inflation target depends on factors like productivity
  • Too early to assess AI’s potential on productivity
  • Progress on inflation has been aided by both Fed policy impact on demand and healing of the supply-side.
  • There is still room for healing on the supply-side help lower inflation.
  • 20% of companies are still seeing shortage of goods supplies
  • There is much uncertainty around the neutral rate of interest.
  • At the policy interest rate will depend on performance of inflation
  • Aware that unemployment rate can move fast when it starts to change
  • Watching commercial real estate for source of financial stress.
  • Keeping a close eye on regional bank exposure
  • May be some upward pressure coming on goods prices given global shipping, other risk
  • Every meeting is ‘live’ from here and moving forward.

This article was written by Greg Michalowski at www.forexlive.com. Source