- Growth likely slowed in Q1
- Economy solid despite heightened uncertainty and downside risks
- Inflation is a bit above 2% goal, has come down a great deal
- So far larger than expected tariffs likely mean higher inflation and slower growth
- Sharp decline in business, household sentiment and elevated uncertainty reflect trade policy concerns
- Labor market solid, broadly in balance, not contributing to inflation
- PCE prices likely rose 2.3% in the 12 months through March
- Admin policies still evolving, effects remain uncertain
- We may find both sides of mandate challenged, if so, we would consider how far economy is from each goal and potential time horizons for those gaps to close
These comments don’t sound like anything different from the Fed press conference. The initial reaction is stock market selling as many were hoping for a dovish shift like Waller.
I think that final line about gaps closing could be viewed dovishly as inflation shocks are likely to be more of a one-off while economic weakness tends to snowball.
FX moves have been minimal.
This article was written by Adam Button at www.forexlive.com.