Fed’s Kugler says her expectations for Fed Funds consistent with March FOMC projections

Federal Reserve Board Governor Adriana

Headlines via Reuters:

  • My policy rate expectation is consistent with March FOMC meeting
    policymaker projections
  • If disinflation and
    labor market conditions proceed as i am currently expecting, then
    some lowering of the policy rate this year would be appropriate
  • Expect
    disinflationary trend to continue
  • Policy is currently
    restrictive, and my baseline expectation is that disinflation will
    continue without a broad economic slowdown
  • Such an outcome is
    not assured
  • Inflation progress
    has sometimes been bumpy
  • Annual core PCE at
    2.8% represents ‘considerable progress’ but is still ‘meaningfully
    above’ Fed’s 2% target
  • Data on new tenant
    rent agreements suggest that housing inflation broadly will continue
    to cool
  • Continued
    disinflation will indeed require further progress in housing and
    non-housing services
  • Labor market has
    moved into better balance
  • Suspect strong
    population growth ‘helps resolve the puzzle’ of labor market growth
    and strong consumption even as inflation eases
  • Important that wage
    growth be consistent with 2% inflation over time; US is moving back
    toward that kind of wage growth
  • Anchored inflation
    expectations are evident in consumer and business surveys
  • Expect consumption
    growth to slow some this year
  • Consumer spending
    was soft in January and February, suggesting we are on track for
    lower consumption growth in q1 vs second half of 2023
  • Expect GDP growth
    this year to be solid but slower than 2023 pace of 3.1%
  • My baseline
    expectation is that further disinflation can be accomplished without
    a significant rise in unemployment
  • Appears supply
    networks are adapting to port of Baltimore disruption

Bolding above is mine. ‘Meaningfully above’ doesn’t sound to me like we get a rate cut in two months. But, I’ve been like a broken record on this (kids, ask an oldie what being a broken record means).

This article was written by Eamonn Sheridan at www.forexlive.com. Source