Fed Cook comments US economy, keeping an eye on the inflation expectations 💲

Lisa Cook from the US Federal Reserve commented today US economy and inflation. Cook expects a bumpy path for US inflation in the short term but believes that price pressures will fall down across the economy to the 2% goal, as Fed policy is restrictive. 

Fed Cook

• It is a good idea to pay attention to the distribution of Fed dots over the median.
• We know there are problems with commercial real estate, commercial real estate issues loom larger for smaller banks.
• It will be a challenge to push productivity beyond long-term average.
• There's ample evidence that monetary policy is restrictive.
• The Fed is watching the unemployment rate, but it's still at a low level.
• There's been a long-standing shortage of housing. It is defensible to include owner's equivalent rent in CPI.
• There are challenges measuring housing inflation. The financial system is not currently positioned to unusually amplify any future shock.
• Monthly job gains needed to keep the unemployment rate steady likely have doubled to nearly 200,000.
• I expect economic growth to remain near the rate of potential growth, somewhat above 2%
• Rising credit card and auto loan delinquencies are not yet concerning, but need watching.
• I lean toward optimism on innovation, productivity, allowing faster pace of non-inflationary growth.
• Progress on inflation has slowed, but I expect the disinflation trend to continue. The risks to achieving inflation and employment goals have moved toward better balance.
• The job market is tight but not overheated. Policy would also need to respond to sharper-than-expected weakening of the economy and the labour market.
•  Inflation has slowed, and the labour market tightness has eased, but I am fully committed to 2% inflation target.
• Monetary policy is restrictive. The timing of any policy adjustment will depend on economic data and its implications for outlook and the balance of risks.
• I am very attentive to inflation expectations. A rise in inflation expectations would imply keeping monetary policy restrictive for longer.
• I expect 3 and 6 month inflation rates to move lower on a bumpy path. Current policy is well positioned to respond to economic outlook.
• I see 12-month inflation moving sideways for the rest of this year, and slowing more sharply next year. At some point, it will be appropriate to cut rates.

EURUSD (H1 interval)

The EURUSD pair loses today almost 0.25%, but the sell-off stopped at the 61.8 Fibonacci retracement level of the rising wave since 14 April.

Source: xStation5