REUTERS
"Fed's Goolsbee: policy 'restrictive,' more disinflation likely"
By Ann Saphir
February 29, 2024
Feb 29 (Reuters) - Chicago Federal Reserve Bank President Austan Goolsbee on Thursday said he believes last year's improvements in the supply of goods and labor set the stage for further declines in U.S. inflation this year, a signal he remains on board for interest-rate cuts later this year.
"Rates are pretty restrictive," Goolsbee said in an event sponsored by Princeton University.
"The question is, how long to remain this restrictive."
Goolsbee did not give an answer to that question.
But if inflation continues to come down, he said, the Fed's policy rate, now at 5.25%-5.5%, will become increasingly restrictive in "real" terms even if it is held steady.
"Eventually," he added, that could hurt the labor market, which has so far stayed strong despite the Fed's aggressive rate hikes in 2022-2023.
Goolsbee said he feels there is still scope for the U.S. economy this year to continue on what he has dubbed the "golden path" of falling inflation alongside a robust labor market and economic growth, a historically unusual pattern.
Repairs to the pandemic-damaged supply chain and a boost in immigration that lifted U.S. labor force participation helped push inflation down substantially last year, and some analysts have said they think those positive developments have run their course.
Goolsbee disagreed.
Research suggests that even if the labor supply does not continue to improve as it did last year, the lagged effect of that increase in pushing down inflation is likely still ahead, he said.
"I still feel like there is supply benefit coming through the system on both the supply chain, and the impact of labor supply," Goolsbee said, adding he would be "careful" about extrapolating from a government report showing inflation accelerated in January.
He repeated that he finds it a "puzzle" why housing inflation has not improved more than it has, given the decline in rents, and is watching that data closely.
Reporting by Ann Saphir; Editing by Chris Reese
https://www.reuters.com/markets/us/feds ... 024-02-29/
THE FEDERAL RESERVE
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Barkin: I still see wage, inflation pressures"
Reuters
March 1, 2024
March 1 (Reuters) - Price increase pressures still exist in the U.S. economy and it is too soon to predict when the Federal Reserve will be able to begin to cut its benchmark interest rate, Richmond Federal Reserve President Thomas Barkin said on Friday.
"We'll see," Barkin said in an interview with broadcaster CNBC when asked about the possibility of interest rate reductions this year.
"I'm still hopeful inflation is going to come down and if inflation normalizes then it makes the case for why you want to normalize rates, but to me it starts with inflation."
Barkin added that he still sees "wage pressures, I still see inflation pressures...we just had a high inflation report yesterday..."
"On the goods side inflation is settling."
"On the services side, not so much."
Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/feds ... 024-03-01/
"Fed's Barkin: I still see wage, inflation pressures"
Reuters
March 1, 2024
March 1 (Reuters) - Price increase pressures still exist in the U.S. economy and it is too soon to predict when the Federal Reserve will be able to begin to cut its benchmark interest rate, Richmond Federal Reserve President Thomas Barkin said on Friday.
"We'll see," Barkin said in an interview with broadcaster CNBC when asked about the possibility of interest rate reductions this year.
"I'm still hopeful inflation is going to come down and if inflation normalizes then it makes the case for why you want to normalize rates, but to me it starts with inflation."
Barkin added that he still sees "wage pressures, I still see inflation pressures...we just had a high inflation report yesterday..."
"On the goods side inflation is settling."
"On the services side, not so much."
Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/feds ... 024-03-01/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Kugler 'optimistic' on disinflation without big job losses"
By Ann Saphir
March 1, 2024
March 1 (Reuters) - Federal Reserve Governor Adriana Kugler on Friday signaled she sees the elusive "soft landing" of falling inflation amidst a healthy labor market within reach for the U.S. economy, noting that inflation expectations remain anchored and the Fed has avoided a wage-price spiral.
"I am cautiously optimistic that we will see continued progress on disinflation without significant deterioration of the labor market," Kugler said in remarks prepared for delivery to the Stanford Institute for Economic Policy Research Institute's annual economic summit.
Kugler notably did not lay out her expectations for when or how fast the Fed should cut its policy rate, which it drove up rapidly in 2022-2023 and has held in the 5.25% to 5.5% range since last July.
But she said her optimism stems from how quickly Fed interest rate hikes and the reversal of the supply shocks that contributed to inflation have eased price pressures even as the labor market stayed strong.
Inflation surged post-pandemic because of sharp and rapid constraints on the supply of both goods and labor, to which businesses were not able to quickly adjust, she noted.
But it has dropped nearly as rapidly, as supply of both workers and goods came on line last year.
Wage growth slowed as a result, she noted, likely putting to rest the threat of a wage-price spiral that could have allowed inflation to entrench.
Meanwhile inflation expectations have remained anchored, with businesses resetting prices less often than at the height of the inflation surge - a sign, she said, of cooling inflation.
At 3.7%, the U.S. unemployment rate is only a few tenths higher than it was when the Fed started raising rates in March 2022.
Meanwhile the inflation rate by the Fed's targeted measure -- the annual change in the personal consumption expenditures price index -- is down by 4.5 percentage points, to 2.4% at its most recent reading.
"We have seen inflation cool significantly, falling more rapidly than at any time since the 1980s," Kugler said.
"Yet unemployment remains near the lowest levels seen only a few times since the 1960s."
Kugler said the Fed's job is not yet done.
"We are laser focused" on bringing inflation down to the Fed's 2% target, she said.
Reporting by Ann Saphir; Editing by Nick Zieminski and Jonathan Oatis
https://www.reuters.com/markets/us/feds ... 024-03-01/
"Fed's Kugler 'optimistic' on disinflation without big job losses"
By Ann Saphir
March 1, 2024
March 1 (Reuters) - Federal Reserve Governor Adriana Kugler on Friday signaled she sees the elusive "soft landing" of falling inflation amidst a healthy labor market within reach for the U.S. economy, noting that inflation expectations remain anchored and the Fed has avoided a wage-price spiral.
"I am cautiously optimistic that we will see continued progress on disinflation without significant deterioration of the labor market," Kugler said in remarks prepared for delivery to the Stanford Institute for Economic Policy Research Institute's annual economic summit.
Kugler notably did not lay out her expectations for when or how fast the Fed should cut its policy rate, which it drove up rapidly in 2022-2023 and has held in the 5.25% to 5.5% range since last July.
But she said her optimism stems from how quickly Fed interest rate hikes and the reversal of the supply shocks that contributed to inflation have eased price pressures even as the labor market stayed strong.
Inflation surged post-pandemic because of sharp and rapid constraints on the supply of both goods and labor, to which businesses were not able to quickly adjust, she noted.
But it has dropped nearly as rapidly, as supply of both workers and goods came on line last year.
Wage growth slowed as a result, she noted, likely putting to rest the threat of a wage-price spiral that could have allowed inflation to entrench.
Meanwhile inflation expectations have remained anchored, with businesses resetting prices less often than at the height of the inflation surge - a sign, she said, of cooling inflation.
At 3.7%, the U.S. unemployment rate is only a few tenths higher than it was when the Fed started raising rates in March 2022.
Meanwhile the inflation rate by the Fed's targeted measure -- the annual change in the personal consumption expenditures price index -- is down by 4.5 percentage points, to 2.4% at its most recent reading.
"We have seen inflation cool significantly, falling more rapidly than at any time since the 1980s," Kugler said.
"Yet unemployment remains near the lowest levels seen only a few times since the 1960s."
Kugler said the Fed's job is not yet done.
"We are laser focused" on bringing inflation down to the Fed's 2% target, she said.
Reporting by Ann Saphir; Editing by Nick Zieminski and Jonathan Oatis
https://www.reuters.com/markets/us/feds ... 024-03-01/
Re: THE FEDERAL RESERVE
REUTERS
"Fed policy report warns on possible financial sector risks"
By Michael S. Derby and Dan Burns
March 1, 2024
March 1 (Reuters) - The Federal Reserve report released Friday flagged a range of what it deemed "notable" vulnerabilities in financial markets, while adding the stress that roiled the banking sector a year ago has faded considerably.
The Fed also used the latest release of its periodic Monetary Policy Report to say that officials will not start moving their short-term interest rate target down until they gain greater confidence inflation is truly moving back to the 2% target.
In the report, the central bank noted a number of ways in which borrowing levels, or leverage, were increasing risks in the financial sector.
It also said stock prices were "close to historical highs."
The Fed said leverage at hedge funds had stabilized at high levels, while life insurers were facing a situation where they were becoming more reliant on non-traditional sources of funding.
Meanwhile, while banks' sources of funding remain liquid and stable, funding costs were on the rise, the central bank said.
But even with those rising challenges, the Fed report said "the banking system remains sound and resilient" and "acute stress in the banking system has receded since last spring."
A year ago, the Fed contended with bank problems of a magnitude that forced it to launch a new liquidity facility, amid surging demand for central bank credit.
Much of that borrowing has faded away as a major concern for markets and the central bank, and the Fed will close this month the Bank Term Funding Program stood up to deal with the troubles.
The Fed report said credit remains available for most who want it, while acknowledging borrowing's high expense: "Interest rates on both credit cards and auto loans remain higher than the levels observed in 2018 at the peak of the previous monetary policy tightening cycle."
On the economy, the Fed reiterated it was committed to getting inflation pressures back to its target and said the rate-setting Federal Open Market Committee "does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%."
Fed forecasts from the close of last year, buttressed by officials' comments, have all pointed to rate cuts this year amid falling inflation pressures.
But economic strength and an uneven path back to 2% have pushed back market expectations of when the easing will start, likely toward the summer.
PRELUDE TO POWELL
The Fed's twice-yearly report to Congress comes ahead of two days of testimony by Fed Chair Jerome Powell set for Wednesday and Thursday next week.
Powell is likely to face a barrage of lawmaker questions about the Fed's tight policy stance and expectations for easing it, a sensitive topic in a presidential election year.
The report generally recaps economic developments and actions taken by the Fed in the period since the previous update given to lawmakers.
Fed concerns over financial markets' vulnerabilities had already been noted in the release of meeting minutes for the January FOMC meeting, released last week.
At the Fed's most recent policy meeting in January, central bank staff briefed policymakers on their assessment of stability within the U.S. financial system, with the minutes saying staff "characterized the system’s financial vulnerabilities as notable."
A number of congressional Democrats have already been hounding Powell over high rates, complaining they are exacerbating already-poor housing affordability for low- and middle-income households.
Republicans, meanwhile, have been critical about the Fed's initially slow response to inflation and could chastise Powell over indications he may lower rates ahead of the November election.
ELECTION-YEAR RATE CUTS
The Fed's next interest rate-setting meeting is scheduled for March 19-20, and policymakers are widely expected to leave their benchmark policy rate unchanged at 5.25%-5.5%, where it has been since July.
The upcoming meeting will also bring updated forecasts on inflation, employment, growth and interest rates.
In December the Fed penciled in three rate cuts, and in comments to reporters on Wednesday, New York Fed leader John Williams said that outlook is a "reasonable" place for Fed officials to think about the monetary policy outlook.
But the timing of action remains in question.
After a benign run of inflation data through the second half of 2023 led financial markets initially to position for rate cuts as early as the March meeting, the first set of inflation readings for 2024 have at least temporarily stalled some of that momentum on taming the pace of price increases.
Market pricing now reflects a prevailing view that the first cut will occur in June, although a first cut at the April 30-May 1 meeting is not out of the question.
Reporting by Michael S. Derby, Ann Saphir, Lindsay Dunsmuir and Pete Schroeder; Editing by Nick Zieminski
https://www.reuters.com/markets/us/fed- ... 024-03-01/
"Fed policy report warns on possible financial sector risks"
By Michael S. Derby and Dan Burns
March 1, 2024
March 1 (Reuters) - The Federal Reserve report released Friday flagged a range of what it deemed "notable" vulnerabilities in financial markets, while adding the stress that roiled the banking sector a year ago has faded considerably.
The Fed also used the latest release of its periodic Monetary Policy Report to say that officials will not start moving their short-term interest rate target down until they gain greater confidence inflation is truly moving back to the 2% target.
In the report, the central bank noted a number of ways in which borrowing levels, or leverage, were increasing risks in the financial sector.
It also said stock prices were "close to historical highs."
The Fed said leverage at hedge funds had stabilized at high levels, while life insurers were facing a situation where they were becoming more reliant on non-traditional sources of funding.
Meanwhile, while banks' sources of funding remain liquid and stable, funding costs were on the rise, the central bank said.
But even with those rising challenges, the Fed report said "the banking system remains sound and resilient" and "acute stress in the banking system has receded since last spring."
A year ago, the Fed contended with bank problems of a magnitude that forced it to launch a new liquidity facility, amid surging demand for central bank credit.
Much of that borrowing has faded away as a major concern for markets and the central bank, and the Fed will close this month the Bank Term Funding Program stood up to deal with the troubles.
The Fed report said credit remains available for most who want it, while acknowledging borrowing's high expense: "Interest rates on both credit cards and auto loans remain higher than the levels observed in 2018 at the peak of the previous monetary policy tightening cycle."
On the economy, the Fed reiterated it was committed to getting inflation pressures back to its target and said the rate-setting Federal Open Market Committee "does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%."
Fed forecasts from the close of last year, buttressed by officials' comments, have all pointed to rate cuts this year amid falling inflation pressures.
But economic strength and an uneven path back to 2% have pushed back market expectations of when the easing will start, likely toward the summer.
PRELUDE TO POWELL
The Fed's twice-yearly report to Congress comes ahead of two days of testimony by Fed Chair Jerome Powell set for Wednesday and Thursday next week.
Powell is likely to face a barrage of lawmaker questions about the Fed's tight policy stance and expectations for easing it, a sensitive topic in a presidential election year.
The report generally recaps economic developments and actions taken by the Fed in the period since the previous update given to lawmakers.
Fed concerns over financial markets' vulnerabilities had already been noted in the release of meeting minutes for the January FOMC meeting, released last week.
At the Fed's most recent policy meeting in January, central bank staff briefed policymakers on their assessment of stability within the U.S. financial system, with the minutes saying staff "characterized the system’s financial vulnerabilities as notable."
A number of congressional Democrats have already been hounding Powell over high rates, complaining they are exacerbating already-poor housing affordability for low- and middle-income households.
Republicans, meanwhile, have been critical about the Fed's initially slow response to inflation and could chastise Powell over indications he may lower rates ahead of the November election.
ELECTION-YEAR RATE CUTS
The Fed's next interest rate-setting meeting is scheduled for March 19-20, and policymakers are widely expected to leave their benchmark policy rate unchanged at 5.25%-5.5%, where it has been since July.
The upcoming meeting will also bring updated forecasts on inflation, employment, growth and interest rates.
In December the Fed penciled in three rate cuts, and in comments to reporters on Wednesday, New York Fed leader John Williams said that outlook is a "reasonable" place for Fed officials to think about the monetary policy outlook.
But the timing of action remains in question.
After a benign run of inflation data through the second half of 2023 led financial markets initially to position for rate cuts as early as the March meeting, the first set of inflation readings for 2024 have at least temporarily stalled some of that momentum on taming the pace of price increases.
Market pricing now reflects a prevailing view that the first cut will occur in June, although a first cut at the April 30-May 1 meeting is not out of the question.
Reporting by Michael S. Derby, Ann Saphir, Lindsay Dunsmuir and Pete Schroeder; Editing by Nick Zieminski
https://www.reuters.com/markets/us/fed- ... 024-03-01/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Waller: Upcoming balance sheet decisions have no bearing on monetary policy"
By Howard Schneider
March 1, 2024
NEW YORK, March 1 (Reuters) - The Federal Reserve's upcoming decisions about the ultimate size of its balance sheet has no bearing on the central bank's inflation fight or changes to its policy interest rate, Fed Governor Chris Waller said Friday.
"Balance sheet plans are about getting liquidity levels right," Waller said in comments at a monetary policy conference held by the Clark Center for Global Markets at the University of Chicago's Booth School of Business.
"They do not imply anything about the stance of interest rate policy, which is focused on influencing the macroeconomy and achieving our dual mandate."
"Changing our pace of redemptions will occur when the Committee makes a decision to do so, and the timing will be independent of any changes to the policy rate," Waller said.
Waller's comments restate a longstanding "separation principle" between interest rates decisions and balance sheet policy, but at a time when the central bank is trying to decide when to slow and eventually stop an ongoing rundown of its asset holdings.
He pointed to some longer-term issues he would like the Fed to address, including what he feels should be a reset of the balance sheet towards shorter-term Treasury bills that would better match the short-term policy rate that the Fed controls as its key monetary policy tool.
That would "allow our income and expenses to rise and fall together as the (Federal Open Market Committee) increases and cuts the target range," of the benchmark policy rate, he said.
Such an approach would also let the balance sheet contract more quickly if asset purchase programs are needed again in the future.
But on the immediate issue of how far to let the current set of Fed asset holdings decline, Waller said he wants to approach the process "carefully," with an eye on the Fed's 2019 experience when the level of bank reserve's drifted too low and led to turbulence in rate markets.
Waller, commenting on research into the impact of the common balance sheet tightening underway across central banks, said he agreed that the process had proceeded with little apparent market impact.
The current runoff of up to $95 billion monthly "is not a problem," Waller said, "something that a few years ago would have surprised a lot of people" given concerns that a quick pace of "quantitative tightening" but lead to tighter than desired credit conditions.
"I support thinking further about how many more securities to redeem," Waller said, though with roughly $500 billion left in a Fed overnight reverse repurchase facility, "we can continue to reduce our holdings for some time."
Reporting by Howard Schneider; Editing by Nick Zieminski
https://www.reuters.com/markets/us/feds ... 024-03-01/
"Fed's Waller: Upcoming balance sheet decisions have no bearing on monetary policy"
By Howard Schneider
March 1, 2024
NEW YORK, March 1 (Reuters) - The Federal Reserve's upcoming decisions about the ultimate size of its balance sheet has no bearing on the central bank's inflation fight or changes to its policy interest rate, Fed Governor Chris Waller said Friday.
"Balance sheet plans are about getting liquidity levels right," Waller said in comments at a monetary policy conference held by the Clark Center for Global Markets at the University of Chicago's Booth School of Business.
"They do not imply anything about the stance of interest rate policy, which is focused on influencing the macroeconomy and achieving our dual mandate."
"Changing our pace of redemptions will occur when the Committee makes a decision to do so, and the timing will be independent of any changes to the policy rate," Waller said.
Waller's comments restate a longstanding "separation principle" between interest rates decisions and balance sheet policy, but at a time when the central bank is trying to decide when to slow and eventually stop an ongoing rundown of its asset holdings.
He pointed to some longer-term issues he would like the Fed to address, including what he feels should be a reset of the balance sheet towards shorter-term Treasury bills that would better match the short-term policy rate that the Fed controls as its key monetary policy tool.
That would "allow our income and expenses to rise and fall together as the (Federal Open Market Committee) increases and cuts the target range," of the benchmark policy rate, he said.
Such an approach would also let the balance sheet contract more quickly if asset purchase programs are needed again in the future.
But on the immediate issue of how far to let the current set of Fed asset holdings decline, Waller said he wants to approach the process "carefully," with an eye on the Fed's 2019 experience when the level of bank reserve's drifted too low and led to turbulence in rate markets.
Waller, commenting on research into the impact of the common balance sheet tightening underway across central banks, said he agreed that the process had proceeded with little apparent market impact.
The current runoff of up to $95 billion monthly "is not a problem," Waller said, "something that a few years ago would have surprised a lot of people" given concerns that a quick pace of "quantitative tightening" but lead to tighter than desired credit conditions.
"I support thinking further about how many more securities to redeem," Waller said, though with roughly $500 billion left in a Fed overnight reverse repurchase facility, "we can continue to reduce our holdings for some time."
Reporting by Howard Schneider; Editing by Nick Zieminski
https://www.reuters.com/markets/us/feds ... 024-03-01/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Logan: Fed will feel its way to balance sheet limit"
By Howard Schneider
March 1, 2024
NEW YORK, March 1 (Reuters) - The U.S. Federal Reserve will need to slow its asset purchases and feel the way towards a low point for its asset holdings once a key financial buffer is exhausted, Dallas Fed president Lorie Logan said on Friday.
Logan reiterated that as long as financial institutions keep using the Fed's overnight reverse repurchase facility, policymakers can feel confident that banks have enough reserves.
But use of the ONRRP program, at it is known, has been declining fast, from a high of around $2.3 trillion last year to about half a trillion as of the end of last month.
Fed officials have begun discussing when and how to the slow the runoff of assets accumulated to try to fight the economic impact of the pandemic, and avoid hitting a point where bank reserves become scarce - a potential trigger for market volatility.
"When ONRRP balances approach a low level, it will be appropriate to slow the pace of asset runoff."
"As long as there are significant balances in the ONRRP facility, we can be confident that liquidity is more than ample in the aggregate," Logan said in comments to a monetary policy forum held by the Clark Center for Global Markets at the University of Chicago's Booth School of Business.
Once the repo facility hits zero, "there will be more uncertainty about how much excess liquidity remains."
"
I don’t think we can identify the ample level in advance."
"We’ll need to feel our way to it by observing money market spreads and volatility," said Logan, former head of the markets desk at the New York Fed.
Logan's comments were in response to a research paper documenting that the effort underway by central banks to reduce their asset holdings has had much less impact on markets than the corollary expansion of balance sheets during weakening economic conditions.
Logan said she felt the "asymmetry" was largely due to the economic context, with crises coming on fast and "quantitative easing" rolled out quickly as well; tightening programs, by contrast, are typically telegraphed far in advance leaving market adjustments likely more muted and harder to estimate.
Logan did not estimate a stopping point for the balance sheet runoff, but did side with the view, mentioned in minutes of the Fed’s January meeting, that a “slower runoff” would make the adjustment easier for banks and possibly allow a lower balance sheet overall.
Her remarks dovetail with remarks made by some policymakers at January's policy meeting.
Then, according to the meeting minutes released last week, those officials said beginning a gradual taper of QT could allow balance sheet reduction to continue for longer and result in a smaller balance sheet.
Wall Street dealers also see that as a likely outcome.
The survey of bond dealers ahead of the January meeting and released last week showed firms now expect a QT taper to begin in this summer, with the end of balance sheet run down now occurring in early 2025, versus late 2024 as estimated previously, and the Fed's final bond portfolio holdings settling at about $6.5 trillion, or around $250 billion lower than previously thought.
Reporting by Howard Schneider; Editing by Nick Zieminski
https://www.reuters.com/markets/us/feds ... 024-03-01/
"Fed's Logan: Fed will feel its way to balance sheet limit"
By Howard Schneider
March 1, 2024
NEW YORK, March 1 (Reuters) - The U.S. Federal Reserve will need to slow its asset purchases and feel the way towards a low point for its asset holdings once a key financial buffer is exhausted, Dallas Fed president Lorie Logan said on Friday.
Logan reiterated that as long as financial institutions keep using the Fed's overnight reverse repurchase facility, policymakers can feel confident that banks have enough reserves.
But use of the ONRRP program, at it is known, has been declining fast, from a high of around $2.3 trillion last year to about half a trillion as of the end of last month.
Fed officials have begun discussing when and how to the slow the runoff of assets accumulated to try to fight the economic impact of the pandemic, and avoid hitting a point where bank reserves become scarce - a potential trigger for market volatility.
"When ONRRP balances approach a low level, it will be appropriate to slow the pace of asset runoff."
"As long as there are significant balances in the ONRRP facility, we can be confident that liquidity is more than ample in the aggregate," Logan said in comments to a monetary policy forum held by the Clark Center for Global Markets at the University of Chicago's Booth School of Business.
Once the repo facility hits zero, "there will be more uncertainty about how much excess liquidity remains."
"
I don’t think we can identify the ample level in advance."
"We’ll need to feel our way to it by observing money market spreads and volatility," said Logan, former head of the markets desk at the New York Fed.
Logan's comments were in response to a research paper documenting that the effort underway by central banks to reduce their asset holdings has had much less impact on markets than the corollary expansion of balance sheets during weakening economic conditions.
Logan said she felt the "asymmetry" was largely due to the economic context, with crises coming on fast and "quantitative easing" rolled out quickly as well; tightening programs, by contrast, are typically telegraphed far in advance leaving market adjustments likely more muted and harder to estimate.
Logan did not estimate a stopping point for the balance sheet runoff, but did side with the view, mentioned in minutes of the Fed’s January meeting, that a “slower runoff” would make the adjustment easier for banks and possibly allow a lower balance sheet overall.
Her remarks dovetail with remarks made by some policymakers at January's policy meeting.
Then, according to the meeting minutes released last week, those officials said beginning a gradual taper of QT could allow balance sheet reduction to continue for longer and result in a smaller balance sheet.
Wall Street dealers also see that as a likely outcome.
The survey of bond dealers ahead of the January meeting and released last week showed firms now expect a QT taper to begin in this summer, with the end of balance sheet run down now occurring in early 2025, versus late 2024 as estimated previously, and the Fed's final bond portfolio holdings settling at about $6.5 trillion, or around $250 billion lower than previously thought.
Reporting by Howard Schneider; Editing by Nick Zieminski
https://www.reuters.com/markets/us/feds ... 024-03-01/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Bostic: No urgency to cut interest rates given US economy's strength"
By Howard Schneider
March 4, 2024
WASHINGTON, March 4 (Reuters) - The U.S. Federal Reserve is under no urgent pressure to cut interest rates given a "prospering" economy and job market, Atlanta Fed President Raphael Bostic said in remarks that highlighted the risk inflation may get stuck above the central bank's 2% target or be sent even higher by "pent-up exuberance."
Bostic said he still thinks it will likely be appropriate for the Fed to approve two quarter-point rate cuts by the end of this year.
But he also said the Fed was walking a "fine line" to be sure that current economic strength does not evolve into "froth" and a new round of inflation.
Before rate cuts "I need to see more progress to feel fully confident that inflation is on a sure path to averaging 2% over time."
"Only when I gain that confidence will I feel the time is right to begin lowering the federal funds rate," said Bostic, a voter this year on interest rate policy.
"The good news is the labor market and economy are prospering, furnishing the (Federal Open Market) Committee the luxury of making policy without the pressure of urgency."
Bostic aired his views in a new essay, and in separate comments to reporters that acknowledged both growing stress among some consumers, particularly those with lower incomes after a period of high inflation and tight credit, but also his concern that a new surge of demand could counter the Fed's progress on prices.
Given that there was no sign yet of "degradation" to the job market, Bostic said he and his colleagues debating the path of interest rates "have some time to make sure that we get to 2%" inflation.
Bostic said that once rate cuts start, he does not envision them being "back to back," with the pace depending on "how participants in the markets, business leaders and families respond."
The Fed at its upcoming March 19-20 meeting is expected to maintain the benchmark interest rate in the 5.25% to 5.5% range, where it has been since July, and will also issue updated projections for how far rates may fall this year given recent declines in inflation.
Investors currently expect an initial rate cut in June, but that could slip if inflation stalls or the job market and wages continue to beat expectations.
As a baseline, Bostic said he felt inflation was in line to "slowly" return to the Fed's target without major damage to the job market or growth, what he called a "resounding success."
But that outcome, was "hardly assured...it is premature to claim victory in the fight against inflation," he said.
In particular, Bostic said he was concerned that prices for a larger-than-usual share of items are still increasing at a more than 5% annual rate, while a Dallas Fed measure of underlying inflation, at 2.6%, has been stuck "just outside the neighborhood" of the central bank's target.
Bostic said recent talks with business executives made him feel both confident the economy was strong, but concerned about a new surge of demand.
"Many executives tell us they are on pause, ready to deploy assets and ramp up hiring when the time is right," Bostic said.
"If that scenario were to unfold on a large scale, it holds the potential to unleash a burst of new demand..."
"This threat of what I’ll call pent-up exuberance is a new upside risk that I think bears scrutiny in coming months."
Reporting by Howard Schneider; Editing by Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-03-04/
"Fed's Bostic: No urgency to cut interest rates given US economy's strength"
By Howard Schneider
March 4, 2024
WASHINGTON, March 4 (Reuters) - The U.S. Federal Reserve is under no urgent pressure to cut interest rates given a "prospering" economy and job market, Atlanta Fed President Raphael Bostic said in remarks that highlighted the risk inflation may get stuck above the central bank's 2% target or be sent even higher by "pent-up exuberance."
Bostic said he still thinks it will likely be appropriate for the Fed to approve two quarter-point rate cuts by the end of this year.
But he also said the Fed was walking a "fine line" to be sure that current economic strength does not evolve into "froth" and a new round of inflation.
Before rate cuts "I need to see more progress to feel fully confident that inflation is on a sure path to averaging 2% over time."
"Only when I gain that confidence will I feel the time is right to begin lowering the federal funds rate," said Bostic, a voter this year on interest rate policy.
"The good news is the labor market and economy are prospering, furnishing the (Federal Open Market) Committee the luxury of making policy without the pressure of urgency."
Bostic aired his views in a new essay, and in separate comments to reporters that acknowledged both growing stress among some consumers, particularly those with lower incomes after a period of high inflation and tight credit, but also his concern that a new surge of demand could counter the Fed's progress on prices.
Given that there was no sign yet of "degradation" to the job market, Bostic said he and his colleagues debating the path of interest rates "have some time to make sure that we get to 2%" inflation.
Bostic said that once rate cuts start, he does not envision them being "back to back," with the pace depending on "how participants in the markets, business leaders and families respond."
The Fed at its upcoming March 19-20 meeting is expected to maintain the benchmark interest rate in the 5.25% to 5.5% range, where it has been since July, and will also issue updated projections for how far rates may fall this year given recent declines in inflation.
Investors currently expect an initial rate cut in June, but that could slip if inflation stalls or the job market and wages continue to beat expectations.
As a baseline, Bostic said he felt inflation was in line to "slowly" return to the Fed's target without major damage to the job market or growth, what he called a "resounding success."
But that outcome, was "hardly assured...it is premature to claim victory in the fight against inflation," he said.
In particular, Bostic said he was concerned that prices for a larger-than-usual share of items are still increasing at a more than 5% annual rate, while a Dallas Fed measure of underlying inflation, at 2.6%, has been stuck "just outside the neighborhood" of the central bank's target.
Bostic said recent talks with business executives made him feel both confident the economy was strong, but concerned about a new surge of demand.
"Many executives tell us they are on pause, ready to deploy assets and ramp up hiring when the time is right," Bostic said.
"If that scenario were to unfold on a large scale, it holds the potential to unleash a burst of new demand..."
"This threat of what I’ll call pent-up exuberance is a new upside risk that I think bears scrutiny in coming months."
Reporting by Howard Schneider; Editing by Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-03-04/
Re: THE FEDERAL RESERVE
CNBC
"Powell reinforces position that the Fed is not ready to start cutting interest rates"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, MAR 6 2024
KEY POINTS
* In prepared remarks for appearances on Capitol Hill, Fed Chair Jerome Powell said policymakers remain attentive to the risks that inflation poses and don’t want to ease up too quickly.
* “The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the central bank leader said.
* Powell noted again that lowering rates too quickly risks losing the battle against inflation and likely having to raise rates further, while waiting too long poses danger to economic growth.
Federal Reserve Chair Jerome Powell on Wednesday reiterated that he expects interest rates to start coming down this year, but is not ready yet to say when.
In prepared remarks for congressionally mandated appearances on Capitol Hill Wednesday and Thursday, Powell said policymakers remain attentive to the risks that inflation poses and don’t want to ease up too quickly.
“In considering any adjustments to the target range for the policy rate, we will carefully assess the incoming data, the evolving outlook, and the balance of risks,” he said.
“The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
Those remarks were taken verbatim from the Federal Open Market Committee’s statement following its most recent meeting, which concluded Jan. 31.
During the question-and-answer session with House Financial Services Committee members, Powell said he needs “see a little bit more data” before moving on rates.
“We think because of the strength in the economy and the strength in the labor market and the progress we’ve made, we can approach that step carefully and thoughtfully and with greater confidence,” he said.
“When we reach that confidence, the expectation is we will do so sometime this year."
"We can then begin dialing back that restriction on our policy.”
Stocks posted gains as Powell spoke, with the Dow Jones Industrial Average up more than 250 points heading into midday.
Treasurys yields mostly moved lower as the benchmark 10-year note was off about 0.3 percentage point to 4.11%.
Rates likely at peak
In total, the speech broke no new ground on monetary policy or the Fed’s economic outlook.
However, the comments indicated that officials remain concerned about not losing the progress made against inflation and will make decisions based on incoming data rather than a preset course.
“We believe that our policy rate is likely at its peak for this tightening cycle."
"If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in the comments.
“But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured.”
He noted again that lowering rates too quickly risks losing the battle against inflation and likely having to raise rates further, while waiting too long poses danger to economic growth.
Markets had been widely expecting the Fed to ease up aggressively following 11 interest rate hikes totaling 5.25 percentage points that spanned March 2022 to July 2023.
In recent weeks, though, those expectations have changed following multiple cautionary statements from Fed officials.
The January meeting helped cement the Fed’s cautious approach, with the statement explicitly saying rate cuts aren’t coming yet despite the market’s outlook.
As things stand, futures market pricing points to the first cut coming in June, part of four reductions this year totaling a full percentage point.
That’s slightly more aggressive than the Fed’s outlook in December for three cuts.
Inflation easing
Despite the resistance to move forward on cuts, Powell noted the movement the Fed has made toward its goal of 2% inflation without tipping over the labor market and broader economy.
“The economy has made considerable progress toward these objectives over the past year,” Powell said.
He noted that inflation has “eased substantially” as “the risks to achieving our employment and inflation goals have been moving into better balance.”
Inflation as judged by the Fed’s preferred gauge is currently running at a 2.4% annual rate — 2.8% when stripping out food and energy in the core reading that the Fed prefers to focus on.
The numbers reflect “a notable slowing from 2022 that was widespread across both goods and services prices.”
“Longer-term inflation expectations appear to have remained well anchored, as reflected by a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets,” he added.
Powell is likely to face a variety of questions during his two-day visit to Capitol Hill, which started with an appearance Wednesday before the House Financial Services Committee and concludes Thursday before the Senate Banking Committee.
Questioning largely centered around Powell’s views on inflation and rates.
Republicans on the committee also grilled Powell on the so-called Basel III Endgame revisions to bank capital requirements.
Powell said he is part of a group on the Board of Governors that has “real concerns, very specific concerns” about the proposals and said the withdrawal of the plan “is a live option.”
Some of the earlier market gains Wednesday faded following reports that New York Community Bank is looking to raise equity capital, raising fresh concerns about the state of midsize U.S. banks.
Though the Fed tries to stay out of politics, the presidential election year poses particular challenges.
Former President Donald Trump, the likely Republican nominee, was a fierce critic of Powell and his colleagues while in office.
Some congressional Democrats, led by Sen. Elizabeth Warren of Massachusetts, have called on the Fed to reduce rates as pressure builds on lower-income families to make ends meet.
Rep. Ayanna Pressley, D-Ohio, joined the Democrats in calling for lower rates.
During his term, Democrats frequently criticized Trump for trying to cajole the Fed into cutting.
“Housing inflation and housing affordability [is] the No. 1 issue I’m hearing about from my constituents,” Pressley said.
“Families in my district and throughout this country need relief now."
"I truly hope the Fed will listen to them and cut interest rates.”
https://www.cnbc.com/2024/03/06/powell- ... rates.html
"Powell reinforces position that the Fed is not ready to start cutting interest rates"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, MAR 6 2024
KEY POINTS
* In prepared remarks for appearances on Capitol Hill, Fed Chair Jerome Powell said policymakers remain attentive to the risks that inflation poses and don’t want to ease up too quickly.
* “The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the central bank leader said.
* Powell noted again that lowering rates too quickly risks losing the battle against inflation and likely having to raise rates further, while waiting too long poses danger to economic growth.
Federal Reserve Chair Jerome Powell on Wednesday reiterated that he expects interest rates to start coming down this year, but is not ready yet to say when.
In prepared remarks for congressionally mandated appearances on Capitol Hill Wednesday and Thursday, Powell said policymakers remain attentive to the risks that inflation poses and don’t want to ease up too quickly.
“In considering any adjustments to the target range for the policy rate, we will carefully assess the incoming data, the evolving outlook, and the balance of risks,” he said.
“The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
Those remarks were taken verbatim from the Federal Open Market Committee’s statement following its most recent meeting, which concluded Jan. 31.
During the question-and-answer session with House Financial Services Committee members, Powell said he needs “see a little bit more data” before moving on rates.
“We think because of the strength in the economy and the strength in the labor market and the progress we’ve made, we can approach that step carefully and thoughtfully and with greater confidence,” he said.
“When we reach that confidence, the expectation is we will do so sometime this year."
"We can then begin dialing back that restriction on our policy.”
Stocks posted gains as Powell spoke, with the Dow Jones Industrial Average up more than 250 points heading into midday.
Treasurys yields mostly moved lower as the benchmark 10-year note was off about 0.3 percentage point to 4.11%.
Rates likely at peak
In total, the speech broke no new ground on monetary policy or the Fed’s economic outlook.
However, the comments indicated that officials remain concerned about not losing the progress made against inflation and will make decisions based on incoming data rather than a preset course.
“We believe that our policy rate is likely at its peak for this tightening cycle."
"If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in the comments.
“But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured.”
He noted again that lowering rates too quickly risks losing the battle against inflation and likely having to raise rates further, while waiting too long poses danger to economic growth.
Markets had been widely expecting the Fed to ease up aggressively following 11 interest rate hikes totaling 5.25 percentage points that spanned March 2022 to July 2023.
In recent weeks, though, those expectations have changed following multiple cautionary statements from Fed officials.
The January meeting helped cement the Fed’s cautious approach, with the statement explicitly saying rate cuts aren’t coming yet despite the market’s outlook.
As things stand, futures market pricing points to the first cut coming in June, part of four reductions this year totaling a full percentage point.
That’s slightly more aggressive than the Fed’s outlook in December for three cuts.
Inflation easing
Despite the resistance to move forward on cuts, Powell noted the movement the Fed has made toward its goal of 2% inflation without tipping over the labor market and broader economy.
“The economy has made considerable progress toward these objectives over the past year,” Powell said.
He noted that inflation has “eased substantially” as “the risks to achieving our employment and inflation goals have been moving into better balance.”
Inflation as judged by the Fed’s preferred gauge is currently running at a 2.4% annual rate — 2.8% when stripping out food and energy in the core reading that the Fed prefers to focus on.
The numbers reflect “a notable slowing from 2022 that was widespread across both goods and services prices.”
“Longer-term inflation expectations appear to have remained well anchored, as reflected by a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets,” he added.
Powell is likely to face a variety of questions during his two-day visit to Capitol Hill, which started with an appearance Wednesday before the House Financial Services Committee and concludes Thursday before the Senate Banking Committee.
Questioning largely centered around Powell’s views on inflation and rates.
Republicans on the committee also grilled Powell on the so-called Basel III Endgame revisions to bank capital requirements.
Powell said he is part of a group on the Board of Governors that has “real concerns, very specific concerns” about the proposals and said the withdrawal of the plan “is a live option.”
Some of the earlier market gains Wednesday faded following reports that New York Community Bank is looking to raise equity capital, raising fresh concerns about the state of midsize U.S. banks.
Though the Fed tries to stay out of politics, the presidential election year poses particular challenges.
Former President Donald Trump, the likely Republican nominee, was a fierce critic of Powell and his colleagues while in office.
Some congressional Democrats, led by Sen. Elizabeth Warren of Massachusetts, have called on the Fed to reduce rates as pressure builds on lower-income families to make ends meet.
Rep. Ayanna Pressley, D-Ohio, joined the Democrats in calling for lower rates.
During his term, Democrats frequently criticized Trump for trying to cajole the Fed into cutting.
“Housing inflation and housing affordability [is] the No. 1 issue I’m hearing about from my constituents,” Pressley said.
“Families in my district and throughout this country need relief now."
"I truly hope the Fed will listen to them and cut interest rates.”
https://www.cnbc.com/2024/03/06/powell- ... rates.html
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Powell: Don't expect a soft landing victory lap"
By Howard Schneider
March 6, 2024
WASHINGTON, March 6 (Reuters) - The soft landing, it appears, will not be televised.
At least it won't be announced, declared, or advertised, Federal Reserve Chair Jerome Powell told members of the U.S. House Financial Services Committee in testimony that wove around direct mentions of the upcoming presidential election and efforts to pull him into disputes over fiscal spending, energy policy, and housing, or any claim that the Fed's sought-after "soft landing" - of low inflation and low unemployment - had already arrived.
"Will there be some announcement at some point that we've had a soft landing?..."
"Some official statement that would give people some comfort," Representative Al Green, a Texas Democrat, asked Powell while also noting a campaign-year climate in which claims the economy was sliding into recession competed against data showing a low jobless rate, falling inflation, and steady growth.
"I don't think by us, no," Powell said.
"We are just going to keep our heads down and do our jobs and try to deliver what the public is expecting from us."
"We wouldn't be declaring victory like that."
The exchange highlighted how central Powell and Fed policy could figure into the coming rematch between President Joe Biden and former President Donald Trump.
Regardless of their differences, both men share having appointed Powell as Fed chair.
They may now see their electoral fate tied, to some degree, to Powell's actions as chair - and whether the November vote approaches in a climate of continued low unemployment, slowing inflation, and perhaps falling interest rates, or not.
Powell's aim in what could be a volatile few months in U.S. political discourse is to avoid appearing to favor either candidate as Fed decisions spool out, or get caught too much in the crossfire.
In the middle of a four-year term that expires in May, 2026, regardless of who wins in November, Powell said the U.S. was on "a good path" with conditions consistent with a soft landing.
In fact some analysts feel it has already arrived, with inflation by some measures near the central bank's 2% target and an unemployment rate that has remained below 4% for two years.
But don't expect a victory lap.
"That's the economy that we're trying to achieve."
"We're on a good path so far to be able to get there," Powell said, but "I don't want to put the label on it."
"Other people can do that."
Reporting by Howard Schneider; Editing by Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-03-06/
"Fed's Powell: Don't expect a soft landing victory lap"
By Howard Schneider
March 6, 2024
WASHINGTON, March 6 (Reuters) - The soft landing, it appears, will not be televised.
At least it won't be announced, declared, or advertised, Federal Reserve Chair Jerome Powell told members of the U.S. House Financial Services Committee in testimony that wove around direct mentions of the upcoming presidential election and efforts to pull him into disputes over fiscal spending, energy policy, and housing, or any claim that the Fed's sought-after "soft landing" - of low inflation and low unemployment - had already arrived.
"Will there be some announcement at some point that we've had a soft landing?..."
"Some official statement that would give people some comfort," Representative Al Green, a Texas Democrat, asked Powell while also noting a campaign-year climate in which claims the economy was sliding into recession competed against data showing a low jobless rate, falling inflation, and steady growth.
"I don't think by us, no," Powell said.
"We are just going to keep our heads down and do our jobs and try to deliver what the public is expecting from us."
"We wouldn't be declaring victory like that."
The exchange highlighted how central Powell and Fed policy could figure into the coming rematch between President Joe Biden and former President Donald Trump.
Regardless of their differences, both men share having appointed Powell as Fed chair.
They may now see their electoral fate tied, to some degree, to Powell's actions as chair - and whether the November vote approaches in a climate of continued low unemployment, slowing inflation, and perhaps falling interest rates, or not.
Powell's aim in what could be a volatile few months in U.S. political discourse is to avoid appearing to favor either candidate as Fed decisions spool out, or get caught too much in the crossfire.
In the middle of a four-year term that expires in May, 2026, regardless of who wins in November, Powell said the U.S. was on "a good path" with conditions consistent with a soft landing.
In fact some analysts feel it has already arrived, with inflation by some measures near the central bank's 2% target and an unemployment rate that has remained below 4% for two years.
But don't expect a victory lap.
"That's the economy that we're trying to achieve."
"We're on a good path so far to be able to get there," Powell said, but "I don't want to put the label on it."
"Other people can do that."
Reporting by Howard Schneider; Editing by Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-03-06/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Kashkari sees two rate cuts at most this year"
Reuters
March 6, 2024
March 6 (Reuters) - Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday signaled that stronger economic data since the start of the year will likely make it appropriate for the Fed to cut rates only twice, or possibly just once, this year.
"I was at two in December," Kashkari said in an interview on WSJ Live, referring to the number of quarter-point interest-rate cuts he had penciled in when Fed policymakers last made their quarterly economic forecasts.
Fresh projections are due in two weeks, when the Fed next meets to set policy.
"It's hard to see, with the data that's come in, that I'd be saying more cuts than I had in December," Kashkari said.
"It seems like at a base case I'd be where I was in December, or potentially one fewer, but I haven't decided."
The median forecast of his colleagues in December was three rate cuts this year, which would take the Fed policy rate to a range of 4.5%-4.75%, from its current 5.25%-5.5% range.
Kashkari said the "base case scenario" is that the Fed will not raise rates any further, a view shared by all Fed policymakers, based on their forecasts published in December and remarks since.
If the economy stays resilient and inflation proves to be more entrenched than expected, Kashkari said, "the first thing we do is keep rates where they are for an extended period of time."
With the economy and the labor market strong and inflation coming down, he said: "I would want to see the argument for, why do we think we're actually tamping down the economy if the economy is ongoing in such a healthy way?"
The Fed does want to avoid a downturn, he said, and to stick a "soft landing" where inflation falls but the job market does not collapse, as it historically has done when the Fed has waged a battle with too-high inflation.
But now, he said, "if the economy is doing very well, maybe the economy can sustain this rate environment when we didn't realize that was possible," Kashkari said.
Reporting by Ann Saphir; Editing by Chris Reese and Deepa Babington
https://www.reuters.com/markets/us/feds ... 024-03-06/
"Fed's Kashkari sees two rate cuts at most this year"
Reuters
March 6, 2024
March 6 (Reuters) - Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday signaled that stronger economic data since the start of the year will likely make it appropriate for the Fed to cut rates only twice, or possibly just once, this year.
"I was at two in December," Kashkari said in an interview on WSJ Live, referring to the number of quarter-point interest-rate cuts he had penciled in when Fed policymakers last made their quarterly economic forecasts.
Fresh projections are due in two weeks, when the Fed next meets to set policy.
"It's hard to see, with the data that's come in, that I'd be saying more cuts than I had in December," Kashkari said.
"It seems like at a base case I'd be where I was in December, or potentially one fewer, but I haven't decided."
The median forecast of his colleagues in December was three rate cuts this year, which would take the Fed policy rate to a range of 4.5%-4.75%, from its current 5.25%-5.5% range.
Kashkari said the "base case scenario" is that the Fed will not raise rates any further, a view shared by all Fed policymakers, based on their forecasts published in December and remarks since.
If the economy stays resilient and inflation proves to be more entrenched than expected, Kashkari said, "the first thing we do is keep rates where they are for an extended period of time."
With the economy and the labor market strong and inflation coming down, he said: "I would want to see the argument for, why do we think we're actually tamping down the economy if the economy is ongoing in such a healthy way?"
The Fed does want to avoid a downturn, he said, and to stick a "soft landing" where inflation falls but the job market does not collapse, as it historically has done when the Fed has waged a battle with too-high inflation.
But now, he said, "if the economy is doing very well, maybe the economy can sustain this rate environment when we didn't realize that was possible," Kashkari said.
Reporting by Ann Saphir; Editing by Chris Reese and Deepa Babington
https://www.reuters.com/markets/us/feds ... 024-03-06/