Fed Daly signals that Fed is ready to raise rates 'if inflation breaks out'💵Fed Hammack signals slowing pace of rate cuts

Mary Daly, the president of San Francisco Fed signalled that the Federal Reserve is ready to raise rates if inflation will become a problem again. Here are the highlights from her speech, and also from Fed Hammack, Cleveland Fed president remarks:

Daly

Start investing today or test a free demo

Create account Try a demo Download mobile app Download mobile app

• The Fed's previous framework was aimed to confirm that 2% inflation wasn't a cap and to underscore that the Fed won't fight a healthy labor market if inflation is subdued.
• We are ready to raise rates if inflation breaks out again.

Hammack

• I am very focused on housing and real estate issues. Housing inflation is going to take a lot longer to come down.
• Consumers are really supporting the economy, household balance sheets are solid. The US economy is strong, and the labor market is pretty healthy.
• Setting monetary policy is independent of the national debt. The US debt seems to be on an unsustainable path of growth.
• It is too soon to say what impact the proposed tariffs would have. Labor market has become better balanced. The Fed has more work to do to cool inflation.
• The economy is strong, labor market is healthy. I expect solid growth, low unemployment, and gradual inflation ebbing.
• Data will drive what Fed does with monetary policy. Slowing pace of rate cuts allows the Fed time to sound the economy.
• Monetary policy is likely somewhat restrictive.  Fed at or near time to slow pace of rate cuts. The economic landscape calls for modestly restrictive monetary policy.
• I have an open mind about the December FOMC meeting, more data is incoming. The market view of one cut between now and late January is reasonable.

Today, US central bankers speeches are mostly hawkish, compared to markets sentiments. EURUSD loses 0.3%.

Source: xStation5

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.