Fed’s Goolsbee: Decision last week was close call for me

  • Decision last week was a close call for me
  • It is a perfectly appropriate to have a reconnaissance mission now
  • Trying to figure out if we have done enough, how much more needs to be done
  • Over next several months will get some markers on do we have a handle on inflation
  • Job numbers are extremely robust
  • At the same time hours worked went down
  • Over the next couple months will get a sense if goods inflation is coming down
  • By the fall, housing inflation should begin falling
  • We should be able to get yay ordinate readings on persistence of inflation, not just confusing signals
  • I’ve not decided the right decision in July
  • We failed to prevent inflation, feds forecasting like private forecasts was mistaken
  • Inflation is pervasive around the world
  • Feds framework is ‘wait and see’
  • Probably won’t gain enough info in 6 weeks, but will learn more
  • The lags argument is a tremendously important one
  • it’s worth recognizing how bizarre, unprecedented this pandemic has been
  • Added to the ‘weirdness’ of the pandemic is the uncertain effect of credit tightening and the persistence of inflation
  • The puzzle has been why haven’t goods price come down more, and when will housing prices come down
  • Services inflation has proved very persistent

The more dovish comments from Goolsbee has seemed to give the dollar a push lower.

The EURUSD is trading to a new session highs. The USDCHF, USDCAD and NZDUSD are also trading to new extremes (lower USD) for the day.

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