US dollar gains 📈 Fed Logan and Barkin with hawkish comments after US inflation report

Thomas Barkin, head of the Richmond Fed, and Dalls Fed chief Lorie Logan commented today on the US monetary policy situation, following a choppy inflation reading that showed a lower-than-expected pace of decline. Federal Reserve members remain unanimous that a lower pace of tightening now carries higher risks than an overly hawkish monetary policy.

Fed Logan

• We must be prepared to raise interest rates for a longer period than anticipated if necessary;
• Excessive or rapid tightening risks weakening the labor market more than necessary but too little policy tightening is the biggest risk;
• We should not commit to a maximum Fed rate or a specific path of increases;
• There is some progress on inflation, but services inflation needs to be slower;
• There is little evidence of improvement in services excluding housing inflation, which points to a tight labor market;
•  The labor market needs to achieve a "better equilibrium" in order to permanently bring inflation back to 2%;  
• The U.S. labor market is "incredibly strong" and wage growth is likely to be "significantly slower" to contain inflation.

Fed Barkin

• Last month's job growth was much higher than expected, the labor market was the biggest surprise;
• The Fed does not want inflation to become entrenched and prove hard to fight;
• At this point, for me, the risk of doing too little outweighs the risk of doing too much;
• The real problem is the lag between the effect on demand and the effect of demand on inflation. No one knows what inflation will look like this year or next year;
• A very good case can be made for keeping rates higher for a longer period of time;
• If inflation persists, we may (or may not) raise interest rates higher; We will react to the data. It will take some time to bring it back to target;
• If inflation moderates, we may not raise interest rates as high. If it remains above target, we may have to do more.

The USDDIX index rises above 103 points. The U.S. dollar is strengthening and has halted declines below the 200-session average, which coincided with the 38.2 Fibonacci retracement of the upward wave that began in early February.

Source: xStation5