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2:14 PM · 5 January 2023

George from Fed: After the hikes, maintaining rates will be key issue

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Just after strong data from 'claims' Esther George, head of the Kansas City Fed, spoke on monetary policy and the US economy:

  • Risks to the economy increase when the Federal Reserve raises interest rates. A recession in the U.S. is still not a baseline scenario, but there is a chance that it will occur;
  • The Fed rate is likely to exceed 5% in 2023, and interest rates will be maintained until 2024;
  • According to George, the key will be to maintain rates after the end of the hikes;
  • Unacceptably high inflation is forcing interventions on the Fed, which is affecting demand;
  • According to George, there are no signs of anything that could lead to violent events in the financial system;
  • The Fed needs to pay attention to how balance sheet reduction affects monetary policy while it is very important that the balance sheet continues to be reduced;
  • The latest inflation figures are positive and point to easing price pressure;
  • ADP chief economist Richardson indicated that the labor market remains strong, although employment conditions vary strongly by industry and size of the employers.

DIDX chart, M15 interval. The dollar index strengthened again after strong labor market data and hawkish comments from Esther George of the Kansas City Fed. Source: xStation5

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