Hawkish comments by FOMC members 📃

• Federal Reserve Governor Michelle Bowman emphasized the need for the central bank to proceed with caution and deliberation as it works towards achieving the Fed’s 2% inflation goal. In her recent statements, Bowman underscored the importance of maintaining the Fed's credibility in its fight against inflation by not rushing any decisions. She suggested keeping interest rates stable for a longer period until there is clear progress on inflation. Bowman expressed concerns about various market conditions, including risks associated with commercial real estate and low liquidity in the Treasury market, pointing out that such conditions could exacerbate financial system shocks.

• Minneapolis Fed President Neel Kashkari discussed the implications of higher interest rates on the housing market and the broader economy. He noted that while higher rates might temporarily reduce housing supply, the U.S. faces a long-term challenge in this area. Kashkari also highlighted the strength of the U.S. tech sector as a key underpinning for the U.S. maintaining its status as the world's reserve currency. He acknowledged the potential of artificial intelligence to boost productivity.

• Dallas Fed President Lorie Logan commented on the current economic conditions and monetary policy, suggesting it is too soon to consider lowering interest rates. She pointed out that recent inflation data have been disappointing and emphasized the ongoing uncertainties around whether current policy settings are restrictive enough to achieve the Fed’s inflation target. Logan argued for a need to stay flexible and continue assessing incoming data to ensure that monetary policy remains appropriate. Her remarks reflect a cautious approach, stressing that significant progress on inflation is required before any policy easing can be considered.

The tone of the FOMC members' remarks is rather hawkish, reflecting the Fed's precautionary stance. Interestingly, the bankers focused mainly on inflation data, and the issue of recent weaker labor market data was not addressed. Therefore, in this context, the CPI data, which are scheduled to be published next week, will be of much greater importance. Today, the US dollar index (USDIDX) gained 0.10%. However, this movement is still within a consolidation channel below the downtrend line.

Source: xStation 5