Fed Speak Sounded Mixed – Deutsche Bank
Research Team at Deutsche Bank, suggests that as far as Fed speak was
concerned, while Philly Fed president Harker displayed near term caution
about the outlook he was positive for later in the year.
Key Quotes
“He
stated that “ as we move into the second half of the year with economic
activity growing at trend or slightly above trend, the unemployment
rate below its natural rate and price pressures starting to assert
themselves, policy can truly normalize.” Though he did condition this by
saying this “would not necessarily imply an overly aggressive path for
policy.”
Richmond Fed president Lacker was typically more
hawkish. He argues that that “our labor markets are stronger and growing
stronger, and the household sector is healthy.....[so] the prospects
for continued growth in employment and consumer spending look good.” As
far as policy is concerned, “one should expect the Fed’s interest rate
target to rise at a pace that is gradual but dependent on the economic
outlook.....My own view...[is that] inflation seems to be returning to
our 2 percent goal somewhat more rapidly than expected. As a result, my
sense is that the less leisurely but still gradual pace of target rate
increases that FOMC participants submitted at year-end is still more
likely to be appropriate.”
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