The current week will be full of statements from central bankers. Wall Street is expecting 'dovish language' on the wave of falling inflation in the US. Federal Reserve Vice Chairman Lael Brainard commented today on the situation in the US economy:
- It would probably be appropriate to move to a slower pace of increases soon. The next data will give more answers to questions about the next hikes and the target level of rates. Even with the December meeting, more information will arrive. Since cumulative tightening takes time, it is logical to move at a more cautious pace;
- There are a range of estimates for delaying monetary policy, from many quarters to as little as two or three. With this in mind, the Fed must decide on the appropriate level of further tightening. It's hard to say what the path of rates looks like now; systemic risks may increase with increasingly restrictive increases. The Fed takes many factors into account but is primarily concerned with achieving its inflation target;
- The Fed will be in a better position to assess how policy has worked so far if it takes into account effects that are noticeable only after time. The Federal Reserve has shown a determination to fight inflation and will continue to do so in the future with the goal of keeping inflation expectations lower. The Fed is very focused on the potential repercussions of tightening and, given the risks, should not carry it out too quickly;
- As a result of inflation, Americans' real incomes have fallen. House prices have not risen, and in many places have fallen thanks to monetary tightening. At the same time, rental price growth will probably not reach its peak until next year. The market still sees a large number of vacancies. There is a chance that their number will fall, although it is even more likely that we will see both depending on the industries;
- Growth in average hourly wages is currently offset by high retail margins, but Brainard forecasts a decline. Wage pressures are beginning to ease. It is difficult to clearly predict the path of the labor market and unemployment; future data will shed more light on this. With more deliberate action, the Fed can collect more of them and better adjust the path of rates.
US30 managed to break above major resistance at 33700 pts, which coincides with 61.8% Fibonacci retracement of the downward correction launched in January 2022. Source: xStation5
