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.
“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.”