The Fed will blow again before the September meeting! Governor Waller and hawk Bullard both support a 75 basis point hike

time:2023-03-22 author:Hot industry
The Fed will blow again before the September meeting! Governor Waller and hawk Bullard both support a 75 basis point hike

The quiet period ahead of the Fed's meeting this month comes as more senior Fed officials signal that they will continue to aggressively raise interest rates. St. Louis Fed President Bullard, a hawkish Fed official who has voted in the FOMC this year on the Fed's monetary policy committee, said he preferred the Fed to raise interest rates by 75 basis points, and Wall Street underestimated the possibility of the Fed maintaining higher interest rates next year. Bullard said that while the U.S. CPI for August, released next week, may show progress in lowering inflation, he would not let temporary data determine the decision at the meeting. "We're going to need to see more consistent, longer-lasting evidence." The Fed must have a majority of data to support the view that inflation will clearly fall back to its target of 2%. So, he would have a stronger preference for adding 75 basis points. Bullard commented on the August U.S. nonfarm payrolls report released on Friday, saying that the report was good and reasonable. Some economists believe the report may show some positive signs of progress in the labor market, such as a pickup in the labor force participation rate. Bullard believes that the labor force participation rate has been on a downward trend for the past two decades, and August may be affected by the seasonal adjustment of students returning to school. And some reports support the view that the job market is still overheated. In terms of interest rate hike strategy, Bullard reiterated his previous view that he should exert front-end efforts, that is, vigorously raise interest rates in the early stage, saying that this strategy has been implemented well, so that the Fed's policy interest rate can quickly exert downward pressure on inflation. In his view, the quicker the results are better. Bullard also reiterated his personally favored expectation of raising the policy rate to 3.75% to 4% by the end of the year. This means that the three meetings from September to the end of the year will have to raise interest rates by 150 basis points. He said he has not yet decided which rate path he prefers for next year, but believes that market-priced expectations for a Fed rate cut in the second half of next year may have misjudged the situation with high inflation and the Fed's determination to reduce inflation to its target of 2% . “I think inflation could be relatively high, it could take a while to get back down to 2%, and Wall Street is pricing that wrong. Those things mean higher rates have to stay longer. That’s not the case in There is enough attention in the market pricing today." This is Bullard's statement before the quiet period of the Fed's monetary policy meeting on September 20-21 in two weeks. His speech means that he is more supportive of the Fed's third consecutive rate hike of 75 basis points.

Federal Reserve Governor Waller hinted in support of adding 75 basis points, saying that there was no convincing evidence that inflation continued to fall.

After Bullard's speech, this Friday, the Federal Reserve Governor Waller, who has a permanent FOMC vote in office, has Le said he supported "another sharp" rate hike by the Fed in September, suggesting support for an additional 75 basis points. At the same time, he said: "How much interest rate hikes will be in the future, and the final policy rate level for this cycle of interest rate hikes should be determined solely by future data and its impact on economic activity, employment and inflation." Waller said that inflation is too high , it is too early to say whether inflation has been falling in a meaningful and sustained manner, and he has not seen convincing evidence that inflation is falling in this way. Unless he sees continued modest gains in core prices, he would support further aggressive tightening of the currency. He expects the Fed's rate hikes to continue until at least early next year.

This year's vote for Kansas Fed President: Obviously, the extent and speed of interest rate hikes is a problem.

On Friday, Kansas Fed President George, who has FOMC voting rights this year like Bullard, said that compared with With the Fed's inflation target of 2%, U.S. inflation is still too high, and it is clear that Fed policymakers will continue to unwind monetary easing. At the same time, George warned that the key question is how strong and how fast. Policymakers will need to look closely at the economy to judge how much more tightening is needed, which may be difficult to discern when interest rates become more restrictive. George did not disclose how many basis points he favored raising interest rates in September, but said, "The transmission of monetary policy tightening to the actual economic environment has a lag, which requires a steady and purposeful (action) speed."

After the Fed's first and second leaders speak, the market expects to add 75 basis points in September.

Before Bullard's speech, from the Fed's first and second leaders to senior reporters and institutions, it is expected that the Fed will continue the ultra-aggressive pace of interest rate hikes in September. On Wednesday, Wall Street Journal reporter Nick Timiraos, known as the "New Federal Reserve News Agency", took the lead in releasing an article saying that the Federal Reserve may raise interest rates by 75 basis points in September. We believe that recent public statements and interviews by the Federal Reserve have indicated that little has been done to stem market expectations for a third consecutive rate hike of 75 basis points. Since then, both Goldman Sachs and Nomura have raised their respective expectations for the Fed to raise interest rates in September and November to 75 basis points and 50 basis points, respectively. 4.25%. Also on Wednesday, Fed Vice Chairman Brainard said he would keep raising interest rates until inflation falls and that rates should remain at restrictive levels for some time. She did not disclose how many basis points she prefers to increase in September, but said that the decision depends on the data, and it is necessary to see monthly low inflation data for several months to be confident that inflation will fall to target. This Thursday, Fed Chairman Powell's heavy statement was even more finalized. He reiterated that he will continue to raise interest rates until the fight against inflation is complete, that history warns against premature easing, and that the Fed needs to act bluntly and forcefully now. Bullard's other colleagues also support continued aggressive rate hikes. Chicago Fed President Evans said that the Fed is likely to raise interest rates by 75 basis points at the September interest rate meeting; Cleveland Fed President Mester emphasized that the Fed needs to keep raising interest rates, and more efforts must be made to control inflation, including in order to Tighter financial conditions and further rate hikes. By Thursday, the market expected the Fed to raise interest rates by 75 basis points in September. This article is from Wall Street News, welcome to download the APP to see more
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