Investors, let's break up this earnings week, which has been red so far in terms of declines, with a summary of central bankers' statements as we approach that Fed meeting. 😊
We all know and expect a pause now and interest rates to stay where they are. So I won't elaborate any more, just this time I'll add the statements in question that I found on YahooFinance. The markets are predicting a 97% probability of no rate hike on November 1, and a 29% probability of a quarter percentage point hike in December.
1. Philadelphia Fed President Patrick Harker, October 16: "There is no fundamental reversal in what I'm seeing in the data and hearing from contacts... I believe we are at a point where we can keep rates where they are."
2. Federal Reserve Chairman Jerome Powell, Oct. 19: "Further evidence of persistently above-trend growth or that labor market tightness is no longer easing could threaten further progress on inflation and could warrant further tightening of monetary policy."
Jerome Powell again. "Financial conditions have tightened significantly in recent months, and yields on longer-term bonds have been an important driver of this tightening. We remain attentive to these developments as persistent changes in financial conditions may have implications for the direction of monetary policy."
3. Atlanta Fed President Raphael Bostic, October 20: "I'm really trying to get people to focus on what inflation is, still at 3.7%. Our target is 2. We need to get a lot closer to 2% before I'll consider any easing of our stance."
4. Minneapolis Fed President Neel Kashkari, October 10: "It's certainly possible that higher long-term yields can do some of the work for us in terms of bringing down inflation. But if those higher long-term yields are higher because their expectations of what we're going to do have changed, then we may actually have to meet their expectations in order to maintain those yields."
5. Dallas Fed President Lorie Logan, October 9: "If long-term interest rates remain elevated because of higher term premia, there may be less need to raise the Fed Funds rate. However, to the extent that the strength of the economy is behind the increase in long-term interest rates, the FOMC may need to do more."
6th Fed Board of Governors member, Christopher Waller, October 18: "While there is some basis for expecting inflation to continue to fall, let me remind you, as I have done repeatedly, that we have seen a number of good inflation reports evaporate several times in the recent past. So I'll be watching the next few reports for clearer indications that inflation is on a 2 percent trajectory.
7 Boston Fed President Susan Collins, October 12: "With rates in restrictive territory, I expect wage growth and economic activity in general to slow in the months ahead."
Well, I don't get much clarity from this as to the future outlook, just that for now rates should stay where they are. 😊