After last week's hawkish remarks from FED officials investors eagerly awaited the speeches of two important members of the federal reserve, namely Kaplan and Bullard which both are seen as hawks (although Bullard only from last week). Below we present some key takeaways from their speeches:
Kaplan:
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Create account Try a demo Download mobile app Download mobile app- Expects 6.5% growth with unemployment around 4.0-4.5%
- What you're seeing in the summary of economic projections is much better data and the Fed reacting to that
- We've seen a dramatic drop in skills-training programs during the pandemic. We need to restore the pipeline
- Spending on energy transition is likely to be a persistent inflation boost
- Issue coming out of the financial crisis was a lack of demand. The issue now is supply constraints
- Notes that single family buyers are being squeezed out of housing by post office boxes in Delaware
- It would be wise not to rely on the dollar remaining the world's reserve currency indefinitely
Bullard:
- Expects 2022 core PCE inflation at 2.5%
- We have to be ready for the idea of upside inflation. We have to be ready on both sides
- The anecdotal evidence is overwhelming that this is a very tight labor market
- We're going to give plenty of leeway for the labor market to improve
- Part of the debate is the question of what it means to have inflation above 2% for some time
- The low-rate and low inflation era is not ending anytime soon
- On hike in reverse repos, this was largely a technical move to keep rates within our band
- On the drop in yields: Treasury yields can't ignore low rates in Europe and Japan
- Does not see how US rates could move too much higher than they are in Europe and Japan
