New York Fed chief John C. Williams commented on the US economy and monetary policy overnight Polish time. The USD reacted positively to the hawkish comments, and the dollar index (USDIDX) is trying to maintain momentum after a wave of sell-offs. Expectations of economists, businessmen and fund managers who commented on the Fed's so-called 'Beige Book' survey indicate that the Fed will raise rates by 25 bps in May and then hold them until the end of 2023. The U.S. is expected to enter a recession in 2023 according to 37 of the 47 surveyed, however, at this stage they expect a short and shallow slowdown.
Fed Williams
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Create account Try a demo Download mobile app Download mobile app- Conditions in the banking sector have stabilized. Inflation is too high. The Fed will restore price stability. It will take time for monetary policy to affect inflation.
- Data will show whether Fed policy is restrictive enough, it will be data-driven.
- I expect economic growth to remain positive this year. The economy is currently quite strong.
- The dollar's importance in global trade remains quite strong. The Fed still has a long way to go in terms of reducing its balance sheet (QT).
- There are still mismatches in the labor and economic demand markets. I'm not sure how much credit conditions will tighten.
- Monetary policy is not the reason for the recent banking crisis. The economy is growing at a steady pace, but growth should moderate in the near term
- Inflation is slowing, but demand continues to outpace supply. I see early signs of cooling in the still strong labor market.
- I expect a gradual rise in the unemployment rate to 4%-4.5% over the coming year. It will take at least two years to return to the 2% inflation target. I predict that inflation will fall to 3.25% this year.
- It is too early to assess the impact of credit tightening on the economy. The US labor market remains very tight.
USDIDX bounced off the 23.6 Fibo retracement at 101.58 points and continues to hold above the SMA100 (black line), indicating readiness for a possible resumption of upward movement. The key support zone may be at 101,37 level (38,2 Fibo retracement of the upward wave started in April 14 and previous price reactions). Source: xStation5
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