- We continue to make good progress on bringing inflation down
- We’re strongly committed to bringing inflation down to 2% over time but we stress ‘over time’
- There is some confidence that lower market rents we’re seeing will show up but there’s uncertainty on the timing
- There will be a combination of lower goods and services inflation bringing inflation down to 2% sustainably
- The risks are really two-sided now
- On the January PCE and CPI reports, we have reason to think there were seasonal adjustment effects there
- If you take Jan and Feb together, I don’t think the story of bumpy but lower inflation is unfolding
- I don’t think those numbers add to our confidence that inflation is coming down
- I don’t think we know if rates will be higher in the longer run
- We’re looking for data the confirms what we saw late last year that will give us higher confidence in inflation falling to 2%
- It’s still likely in most people’s view that we will have rate cuts this year, but depends on data
- We do think financial conditions are weighing on economic activity
Quotable:
“The risks are really two sided here. If we ease too much or too soon we can see inflation come back, and if we ease too late we can do unnecessary harm to employment and people’s working lives.”
This article was written by Adam Button at www.forexlive.com. Source