REUTERS
"Fed's Barkin says he's cautious about accuracy of recent economic data"
Reuters
February 8, 2024
Feb 8 (Reuters) - Recent stronger-than-expected data on the U.S. economy may be partly due to the difficulty of making accurate seasonal adjustments around the beginning of a new year, Richmond Federal Reserve Bank President Thomas Barkin said on Thursday.
"The data has been remarkable across the board," Barkin said in an interview with Bloomberg TV, citing strong economic growth and job gains.
"But I am always cautious about numbers around the turn of the year, there's big seasonal adjustments...I am not sure I am going to take too much out of any one month."
Barkin also repeated the Fed could be patient in parsing more inflation data before making any change to its benchmark policy rate.
Reporting by Lindsay Dunsmuir
https://www.reuters.com/markets/us/feds ... 024-02-08/
THE FEDERAL RESERVE
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Collins says her baseline expectation is 75 bps of rate cuts this year"
Reuters
February 8, 2024
Feb 8 (Reuters) - Boston Federal Reserve Bank President Susan Collins on Thursday said she believes the U.S. central bank will likely cut interest rates by three-quarters of a percentage point this year, starting once data confirms inflation is on path to 2% amid a strong labor market.
"I do expect that before the end of the year it will be appropriate for us to carefully begin easing rates," Collins said in an interview with Sirius XM, saying she is optimistic on inflation's progress but realistic about the risk it could stall out because of strong economic growth.
"We are going to need growth to slow, and I am looking for an orderly slowdown" that is also equitable, she said.
Fed policymaker projections published in December show most U.S. central banks see the policy rate, now at 5.25%-5.5%, ending 2024 in the 4.5%-4.75% range or below, with the median expectation for three 25 basis-point rate cuts.
"My baseline is similar" Collins said, adding that policy is not on a preset path and that the Fed will need to adjust based on the data.
As for when rate cuts could start, she said, "I will need more, additional evidence" to confirm inflation is trending toward the Fed's 2% goal, though delaying cuts until the 12-month rate hits that goal "would be waiting too long."
Inflation by the Fed's targeted measure, the year-over-year change in the personal consumption expenditures price index, was 2.6% in December, the latest figure available, less than half its pace in January 2023.
On a 7-month annualized basis it is at 2%.
Reporting by Ann Saphir; Editing by Franklin Paul and Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-02-08/
"Fed's Collins says her baseline expectation is 75 bps of rate cuts this year"
Reuters
February 8, 2024
Feb 8 (Reuters) - Boston Federal Reserve Bank President Susan Collins on Thursday said she believes the U.S. central bank will likely cut interest rates by three-quarters of a percentage point this year, starting once data confirms inflation is on path to 2% amid a strong labor market.
"I do expect that before the end of the year it will be appropriate for us to carefully begin easing rates," Collins said in an interview with Sirius XM, saying she is optimistic on inflation's progress but realistic about the risk it could stall out because of strong economic growth.
"We are going to need growth to slow, and I am looking for an orderly slowdown" that is also equitable, she said.
Fed policymaker projections published in December show most U.S. central banks see the policy rate, now at 5.25%-5.5%, ending 2024 in the 4.5%-4.75% range or below, with the median expectation for three 25 basis-point rate cuts.
"My baseline is similar" Collins said, adding that policy is not on a preset path and that the Fed will need to adjust based on the data.
As for when rate cuts could start, she said, "I will need more, additional evidence" to confirm inflation is trending toward the Fed's 2% goal, though delaying cuts until the 12-month rate hits that goal "would be waiting too long."
Inflation by the Fed's targeted measure, the year-over-year change in the personal consumption expenditures price index, was 2.6% in December, the latest figure available, less than half its pace in January 2023.
On a 7-month annualized basis it is at 2%.
Reporting by Ann Saphir; Editing by Franklin Paul and Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-02-08/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Logan: risks more balanced, no urgency on rate cuts"
By Ann Saphir
February 9, 2024
Hurst, Texas, Feb 9 (Reuters) - Dallas Federal Reserve Bank President Lorie Logan on Friday said she is in no rush to cut interest rates, and while there has been "tremendous progress" on bringing down inflation, she wants more data to confirm the progress is durable.
"The risks that I'm seeing in the economy are becoming more in balance, but I do think we need to take time here to continue to look at the data," she said at the Tarrant Transportation Summit in Hurst, Texas.
She said she supported the Fed's decision last month to leave the policy rate on hold in the 5.25%-5.5% range, even as Fed Chair Jerome Powell signaled that rate cuts are likely later this year.
"I'm really not seeing any urgency to make any additional adjustments at this time," she said, adding that the labor market is still tight and she wants to "build our confidence whether the progress that we've seen on inflation will be sustained over the medium term."
It's a refrain that many of Logan's colleagues - including fellow hawks like Richmond Fed President Thomas Barkin as well as the more dovish-leaning Atlanta Fed President Raphael Bostic - have voiced of late: that there is still more work to do on bringing down inflation, and the economy's strength means the Fed can hold rates where they are to maintain that downward pressure on prices.
Inflation is at the Fed's 2% goal as measured on a six-month annualized basis, she noted, and even on a year-over-year basis it is below 3%.
"I think we are in a good place," she said, with a "fairly benign outlook, with inflation continuing to be sustained near our target, with healthy growth and a labor market that's loosening but still robust."
But there are risks, Logan said, including the potential for geopolitical stresses or renewed supply chain problems to stall or reverse progress on inflation.
Logan said the Fed's ongoing shrinking of its balance sheet has been "going well," though she did not offer any details or provide her views on the outlook for when the Fed may slow or end that process.
Reporting by Ann Saphir; Editing by Mark Porter and Andrea Ricci
https://www.reuters.com/markets/feds-lo ... 024-02-09/
"Fed's Logan: risks more balanced, no urgency on rate cuts"
By Ann Saphir
February 9, 2024
Hurst, Texas, Feb 9 (Reuters) - Dallas Federal Reserve Bank President Lorie Logan on Friday said she is in no rush to cut interest rates, and while there has been "tremendous progress" on bringing down inflation, she wants more data to confirm the progress is durable.
"The risks that I'm seeing in the economy are becoming more in balance, but I do think we need to take time here to continue to look at the data," she said at the Tarrant Transportation Summit in Hurst, Texas.
She said she supported the Fed's decision last month to leave the policy rate on hold in the 5.25%-5.5% range, even as Fed Chair Jerome Powell signaled that rate cuts are likely later this year.
"I'm really not seeing any urgency to make any additional adjustments at this time," she said, adding that the labor market is still tight and she wants to "build our confidence whether the progress that we've seen on inflation will be sustained over the medium term."
It's a refrain that many of Logan's colleagues - including fellow hawks like Richmond Fed President Thomas Barkin as well as the more dovish-leaning Atlanta Fed President Raphael Bostic - have voiced of late: that there is still more work to do on bringing down inflation, and the economy's strength means the Fed can hold rates where they are to maintain that downward pressure on prices.
Inflation is at the Fed's 2% goal as measured on a six-month annualized basis, she noted, and even on a year-over-year basis it is below 3%.
"I think we are in a good place," she said, with a "fairly benign outlook, with inflation continuing to be sustained near our target, with healthy growth and a labor market that's loosening but still robust."
But there are risks, Logan said, including the potential for geopolitical stresses or renewed supply chain problems to stall or reverse progress on inflation.
Logan said the Fed's ongoing shrinking of its balance sheet has been "going well," though she did not offer any details or provide her views on the outlook for when the Fed may slow or end that process.
Reporting by Ann Saphir; Editing by Mark Porter and Andrea Ricci
https://www.reuters.com/markets/feds-lo ... 024-02-09/
Re: THE FEDERAL RESERVE
REUTERS
"Fed still on track even if inflation's path down is bumpy - Goolsbee"
By Lindsay Dunsmuir
February 14, 2024
Feb 14 (Reuters) - The Federal Reserve's path back to its 2% inflation target rate would still be on track even if price increases run a bit hotter-than-expected over the next few months, and the central bank should be wary of waiting too long before it cuts interest rates, Chicago Fed President Austan Goolsbee said on Wednesday.
"Even if inflation comes in a bit higher for a few months...it would still be consistent with our path back to target," Goolsbee said in prepared remarks at an event hosted by the Council on Foreign Relations in New York.
"I don't support waiting until inflation on a 12-month basis has already achieved 2% to begin to cut rates."
The Fed last month kept interest rates unchanged in the 5.25% to 5.50% target range, where it has been held since last July, as it seeks more confidence that the annual pace of price increases is on a sustainable path back down to 2%.
U.S. consumer prices rose more than expected in January, government data showed on Tuesday, amid a surge in the cost of rental housing.
As a result, traders piled into bets the central bank will wait until June to start reducing the policy rate, and now expect three quarter-point cuts by year-end, in line with what Fed policymakers projected in December but less than the four or more rate cuts markets had priced in at the start of the week.
Goolsbee said housing services inflation was "at odds" with market data on rents for new leases and that while he expected pricing pressures there to resume easing, Tuesday's Consumer Price Index (CPI) data meant the "puzzle got bigger... and it is something I am watching."
However he cautioned that the longer-term and broader trend was more important.
"Let's not get amped up when you get one month of CPI that was higher than what you expected it to be," Goolsbee said during a question and answer session.
"It is totally clear that inflation is coming down."
He also noted that over the past seven months the core Personal Consumption Expenditures inflation gauge, which the Fed also closely tracks and which strips out volatile food and energy prices, has been running at the Federal Reserve's 2% target or even below.
"Rate cuts should be tied to confidence in being on a path toward the target," Goolsbee said, "I think it's worth acknowledging that if we stay this restrictive for too long, we will start having to worry about the employment side of the Fed's mandate."
Reporting by Lindsay Dunsmuir; Additional reporting by Lananh Nguyen; Editing by Andrea Ricci
https://www.reuters.com/markets/us/fed- ... 024-02-14/
"Fed still on track even if inflation's path down is bumpy - Goolsbee"
By Lindsay Dunsmuir
February 14, 2024
Feb 14 (Reuters) - The Federal Reserve's path back to its 2% inflation target rate would still be on track even if price increases run a bit hotter-than-expected over the next few months, and the central bank should be wary of waiting too long before it cuts interest rates, Chicago Fed President Austan Goolsbee said on Wednesday.
"Even if inflation comes in a bit higher for a few months...it would still be consistent with our path back to target," Goolsbee said in prepared remarks at an event hosted by the Council on Foreign Relations in New York.
"I don't support waiting until inflation on a 12-month basis has already achieved 2% to begin to cut rates."
The Fed last month kept interest rates unchanged in the 5.25% to 5.50% target range, where it has been held since last July, as it seeks more confidence that the annual pace of price increases is on a sustainable path back down to 2%.
U.S. consumer prices rose more than expected in January, government data showed on Tuesday, amid a surge in the cost of rental housing.
As a result, traders piled into bets the central bank will wait until June to start reducing the policy rate, and now expect three quarter-point cuts by year-end, in line with what Fed policymakers projected in December but less than the four or more rate cuts markets had priced in at the start of the week.
Goolsbee said housing services inflation was "at odds" with market data on rents for new leases and that while he expected pricing pressures there to resume easing, Tuesday's Consumer Price Index (CPI) data meant the "puzzle got bigger... and it is something I am watching."
However he cautioned that the longer-term and broader trend was more important.
"Let's not get amped up when you get one month of CPI that was higher than what you expected it to be," Goolsbee said during a question and answer session.
"It is totally clear that inflation is coming down."
He also noted that over the past seven months the core Personal Consumption Expenditures inflation gauge, which the Fed also closely tracks and which strips out volatile food and energy prices, has been running at the Federal Reserve's 2% target or even below.
"Rate cuts should be tied to confidence in being on a path toward the target," Goolsbee said, "I think it's worth acknowledging that if we stay this restrictive for too long, we will start having to worry about the employment side of the Fed's mandate."
Reporting by Lindsay Dunsmuir; Additional reporting by Lananh Nguyen; Editing by Andrea Ricci
https://www.reuters.com/markets/us/fed- ... 024-02-14/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Barr: 'Bumpy' path to 2% inflation means soft landing jury still out"
By Howard Schneider
February 14, 2024
WASHINGTON, Feb 14 (Reuters) - Hotter-than-expected inflation in January shows that the United States' path back to 2% inflation "may be a bumpy one," Fed Vice Chair for Supervision Michael Barr said on Wednesday, adding it was too early to be assured price stability will be restored without a significant blow to jobs or economic growth.
"It's very early to say whether we end up with a soft landing or not," Barr said, referring to the Fed's hoped-for outcome where inflation returns to the Fed's target without a large rise in the unemployment rate.
"I'd be very careful about where we are in that process," with the Fed facing a "difficult" decision on how long to maintain the target rate of interest at the current 5.25% to 5.5% range, Barr said at a National Association for Business Economics conference.
The Fed is "confident we are on a path to 2% inflation," Barr said in a prepared speech at the event.
But a recent report showing prices rose faster than anticipated in January, "is a reminder that the path back to 2% inflation may be a bumpy one."
Consumer prices rose at a yearly 3.1% rate in January, with an underlying measure of core inflation measuring 3.9%, the same as the month before, with rising shelter prices driving the increase.
"We need to see continued good data before we can begin the process of reducing the federal funds rate," Barr said, adding he backed the "careful approach" to cutting rates advocated by Chair Jerome Powell and other Fed policymakers.
The Fed held rates steady at its last meeting in a range between 5.25% and 5.5%, with rate cuts expected to begin some time after an upcoming meeting in March.
But Fed officials have said that will depend on upcoming data confirming that inflation continues to decline, and does not either begin to accelerate or get stalled at a level above the central bank's target.
"It is a difficult set of judgments to make in the current context because there are no clear historical parallels," given the current situation's roots in the coronavirus pandemic, he said.
Barr, who oversees the Fed's supervision and regulation of banks, downplayed some current concerns.
He argued that while certain commercial office buildings may drop in value and pose problems for the banks with loans on those buildings, the issue would play out over time and would not pose an "acute" problem for the financial sector.
Referring to the failure nearly a year ago of Silicon Valley Bank, and the fears of a broader credit crunch that followed it, Barr said the financial system was "in much better shape than it was last spring."
Citing similar concerns around recent troubles at the New York Community Bancorp, Barr said, "a single bank missing its revenue expectations and increasing its provisioning does not change the fact that the overall banking system is strong."
"We see no signs of liquidity problems across the system," Barr said.
Regarding the Fed's balance sheet, Barr said the Fed was monitoring markets carefully as it continues to draw down its asset holdings, to be sure that banks can continue to easily access reserves.
Detailed talks about the future of the balance sheet would commence "soon," Barr said.
Reporting by Howard Schneider; Editing by Andrea Ricci and Deepa Babington
https://www.reuters.com/markets/us/feds ... 024-02-14/
"Fed's Barr: 'Bumpy' path to 2% inflation means soft landing jury still out"
By Howard Schneider
February 14, 2024
WASHINGTON, Feb 14 (Reuters) - Hotter-than-expected inflation in January shows that the United States' path back to 2% inflation "may be a bumpy one," Fed Vice Chair for Supervision Michael Barr said on Wednesday, adding it was too early to be assured price stability will be restored without a significant blow to jobs or economic growth.
"It's very early to say whether we end up with a soft landing or not," Barr said, referring to the Fed's hoped-for outcome where inflation returns to the Fed's target without a large rise in the unemployment rate.
"I'd be very careful about where we are in that process," with the Fed facing a "difficult" decision on how long to maintain the target rate of interest at the current 5.25% to 5.5% range, Barr said at a National Association for Business Economics conference.
The Fed is "confident we are on a path to 2% inflation," Barr said in a prepared speech at the event.
But a recent report showing prices rose faster than anticipated in January, "is a reminder that the path back to 2% inflation may be a bumpy one."
Consumer prices rose at a yearly 3.1% rate in January, with an underlying measure of core inflation measuring 3.9%, the same as the month before, with rising shelter prices driving the increase.
"We need to see continued good data before we can begin the process of reducing the federal funds rate," Barr said, adding he backed the "careful approach" to cutting rates advocated by Chair Jerome Powell and other Fed policymakers.
The Fed held rates steady at its last meeting in a range between 5.25% and 5.5%, with rate cuts expected to begin some time after an upcoming meeting in March.
But Fed officials have said that will depend on upcoming data confirming that inflation continues to decline, and does not either begin to accelerate or get stalled at a level above the central bank's target.
"It is a difficult set of judgments to make in the current context because there are no clear historical parallels," given the current situation's roots in the coronavirus pandemic, he said.
Barr, who oversees the Fed's supervision and regulation of banks, downplayed some current concerns.
He argued that while certain commercial office buildings may drop in value and pose problems for the banks with loans on those buildings, the issue would play out over time and would not pose an "acute" problem for the financial sector.
Referring to the failure nearly a year ago of Silicon Valley Bank, and the fears of a broader credit crunch that followed it, Barr said the financial system was "in much better shape than it was last spring."
Citing similar concerns around recent troubles at the New York Community Bancorp, Barr said, "a single bank missing its revenue expectations and increasing its provisioning does not change the fact that the overall banking system is strong."
"We see no signs of liquidity problems across the system," Barr said.
Regarding the Fed's balance sheet, Barr said the Fed was monitoring markets carefully as it continues to draw down its asset holdings, to be sure that banks can continue to easily access reserves.
Detailed talks about the future of the balance sheet would commence "soon," Barr said.
Reporting by Howard Schneider; Editing by Andrea Ricci and Deepa Babington
https://www.reuters.com/markets/us/feds ... 024-02-14/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Waller says post-pandemic response to inflation was 'not textbook'"
By Howard Schneider
February 14, 2024
WASHINGTON, Feb 14 (Reuters) - The Federal Reserve bound itself to promises during the coronavirus pandemic that proved too constraining once inflation started to surge, forcing the U.S. central bank to pivot quickly to tight monetary policy, Fed Governor Christopher Waller said in an essay published on Wednesday.
"Overall, the (Federal Open Market Committee's) response to tightening after the COVID pandemic was not textbook," requiring an accelerated stop to ongoing asset purchases and the fastest interest rate hikes in 30 years, Waller said in a note co-authored with Fed senior adviser Jane Ihrig.
"When looking back, there are lessons to be learned," the two wrote, chief among them that Fed statements "should be careful to use language that allows the Committee the flexibility it needs to respond to changing economic and financial conditions."
As it stood, the Fed's pledge in 2020 to maintain loose monetary policy until the job market had been largely healed from the pandemic and inflation was on track to move above the central bank's 2% target kept it sidelined as prices started to surge far more than policymakers had in mind.
The economy was in deep disarray at the time that pledge was made, and the Fed was also putting in place a new framework meant to ensure inflation did not continue to fall below its 2% target.
At it was, policy rules and even different rate-hike criteria the Fed had used in the past would have opened the door to increases in the central bank's benchmark overnight interest rate in the spring of 2021, the two wrote.
The Fed's first rate hike occurred in March of 2022.
Waller and Ihrig said their "intent is not to criticize" the Fed's decisions of the last few years but "to assess these policy strategies should central banks be confronted with a similar crisis in the future."
Indeed, many of the arguments are familiar ones laid out by Waller and others in earlier public comments.
The two also noted that the Fed's policies had "coincided with stable financial markets, a strong labor market, and inflation moving down from its peak."
But they could be relevant to an upcoming review of the Fed's operating framework, a document that tilted policy towards attention to the job market and was used to argue for a promise to lift inflation above target for a period of time in order to make up for inflation shortfalls - the criteria that acted as a constraint on central bankers as inflation rose.
Reporting by Howard Schneider; Editing by Paul Simao
https://www.reuters.com/markets/us/feds ... 024-02-14/
"Fed's Waller says post-pandemic response to inflation was 'not textbook'"
By Howard Schneider
February 14, 2024
WASHINGTON, Feb 14 (Reuters) - The Federal Reserve bound itself to promises during the coronavirus pandemic that proved too constraining once inflation started to surge, forcing the U.S. central bank to pivot quickly to tight monetary policy, Fed Governor Christopher Waller said in an essay published on Wednesday.
"Overall, the (Federal Open Market Committee's) response to tightening after the COVID pandemic was not textbook," requiring an accelerated stop to ongoing asset purchases and the fastest interest rate hikes in 30 years, Waller said in a note co-authored with Fed senior adviser Jane Ihrig.
"When looking back, there are lessons to be learned," the two wrote, chief among them that Fed statements "should be careful to use language that allows the Committee the flexibility it needs to respond to changing economic and financial conditions."
As it stood, the Fed's pledge in 2020 to maintain loose monetary policy until the job market had been largely healed from the pandemic and inflation was on track to move above the central bank's 2% target kept it sidelined as prices started to surge far more than policymakers had in mind.
The economy was in deep disarray at the time that pledge was made, and the Fed was also putting in place a new framework meant to ensure inflation did not continue to fall below its 2% target.
At it was, policy rules and even different rate-hike criteria the Fed had used in the past would have opened the door to increases in the central bank's benchmark overnight interest rate in the spring of 2021, the two wrote.
The Fed's first rate hike occurred in March of 2022.
Waller and Ihrig said their "intent is not to criticize" the Fed's decisions of the last few years but "to assess these policy strategies should central banks be confronted with a similar crisis in the future."
Indeed, many of the arguments are familiar ones laid out by Waller and others in earlier public comments.
The two also noted that the Fed's policies had "coincided with stable financial markets, a strong labor market, and inflation moving down from its peak."
But they could be relevant to an upcoming review of the Fed's operating framework, a document that tilted policy towards attention to the job market and was used to argue for a promise to lift inflation above target for a period of time in order to make up for inflation shortfalls - the criteria that acted as a constraint on central bankers as inflation rose.
Reporting by Howard Schneider; Editing by Paul Simao
https://www.reuters.com/markets/us/feds ... 024-02-14/
Re: THE FEDERAL RESERVE
REUTERS
"Fed needs time, data, patience on inflation fight: Daly"
Reuters
February 16, 2024
Feb 16 (Reuters) - Despite "remarkable" progress on U.S. inflation, Federal Reserve Bank of San Francisco President Mary Daly said on Friday "there is more work to do" to ensure stable prices - a phrase that signals she feels it's not yet time for interest-rate cuts.
"We will need to resist the temptation to act quickly when patience is needed and be prepared to respond agilely as the economy evolves," Daly said in remarks prepared for delivery to the National Association for Business Economics.
Inflation declined rapidly last year, from 5.5% in January to 2.6% in December by the Fed's targeted measure of the personal consumption expenditures price index.
Unemployment, meanwhile, was 3.7% last month, up just three tenths of a percentage point from the start of the year.
The combination, Daly said, is "unequivocally good news," but it is unclear whether that will continue.
Risks for this year include the potential that inflation's progress slows, or that the labor market falters, she said.
And while projections embedded in financial market pricing and reflected in surveys suggest inflation is on track to the Fed's 2% target, she said, "we need more time and data to be sure that they will be realized."
Data Friday showing underlying wholesale prices surged last month appeared to reinforce that view, though Daly did not cite it specifically.
Financial markets are pricing in about four quarter-point interest-rate cuts this year, starting in June, that will bring the Fed's policy rate to the 4.25%-4.5% range by year end.
Fed policymakers in December largely felt three rate cuts would be appropriate, though they will update those forecasts at their meeting next month.
Reporting by Ann Saphir; Editing by Andrea Ricci
https://www.reuters.com/markets/us/fed- ... 024-02-16/
"Fed needs time, data, patience on inflation fight: Daly"
Reuters
February 16, 2024
Feb 16 (Reuters) - Despite "remarkable" progress on U.S. inflation, Federal Reserve Bank of San Francisco President Mary Daly said on Friday "there is more work to do" to ensure stable prices - a phrase that signals she feels it's not yet time for interest-rate cuts.
"We will need to resist the temptation to act quickly when patience is needed and be prepared to respond agilely as the economy evolves," Daly said in remarks prepared for delivery to the National Association for Business Economics.
Inflation declined rapidly last year, from 5.5% in January to 2.6% in December by the Fed's targeted measure of the personal consumption expenditures price index.
Unemployment, meanwhile, was 3.7% last month, up just three tenths of a percentage point from the start of the year.
The combination, Daly said, is "unequivocally good news," but it is unclear whether that will continue.
Risks for this year include the potential that inflation's progress slows, or that the labor market falters, she said.
And while projections embedded in financial market pricing and reflected in surveys suggest inflation is on track to the Fed's 2% target, she said, "we need more time and data to be sure that they will be realized."
Data Friday showing underlying wholesale prices surged last month appeared to reinforce that view, though Daly did not cite it specifically.
Financial markets are pricing in about four quarter-point interest-rate cuts this year, starting in June, that will bring the Fed's policy rate to the 4.25%-4.5% range by year end.
Fed policymakers in December largely felt three rate cuts would be appropriate, though they will update those forecasts at their meeting next month.
Reporting by Ann Saphir; Editing by Andrea Ricci
https://www.reuters.com/markets/us/fed- ... 024-02-16/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Bostic open to summer time rate cut - CNBC"
By Michael S. Derby
February 16, 2024
NEW YORK, Feb 16 (Reuters) - Federal Reserve Bank of Atlanta President Raphael Bostic said on Friday that while he needs more data to convince him inflation pressures are truly falling, he's open to lowering rates at some point in the next few months.
"My outlook is to start the normalization, start returning our policy stance to a more neutral stance in the summer time," Bostic said in a CNBC interview.
"We've seen tremendous progress" in lowering inflation and that's pulled forward the likely timing of a rate cut from where he had been expecting it, Bostic said.
The progress on price pressures makes the outlook for policy fluid, Bostic noted.
If inflation makes strong progress moving back toward 2% "I'll be willing to pull [rate cut expectations] forward even further, but I want to see it continue before making that judgment."
Bostic appeared on the television channel in the wake of recent data showing that consumer and wholesale price rises were bigger than expected during January, which challenged the view that inflation is retreating swiftly back to 2%.
Bostic said data like this affirm the need for the central bank to be patient, something it can afford to be given the broader strength of the economy.
Bostic noted he was modestly surprised by the data "but not in a big way."
He foresees more declines in inflation but reiterated the path back to 2% could be uneven.
The recent data means "we just have to be patient and let's not get too far ahead and assume that the job is done, because there's still work to do," he said.
Bostic also told CNBC that ample market liquidity means the central bank can continue to press forward with its work to shrink the size of its balance sheet, but he warned he didn't want to push the process too far.
Reporting by Michael S. Derby; Editing by Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-02-16/
"Fed's Bostic open to summer time rate cut - CNBC"
By Michael S. Derby
February 16, 2024
NEW YORK, Feb 16 (Reuters) - Federal Reserve Bank of Atlanta President Raphael Bostic said on Friday that while he needs more data to convince him inflation pressures are truly falling, he's open to lowering rates at some point in the next few months.
"My outlook is to start the normalization, start returning our policy stance to a more neutral stance in the summer time," Bostic said in a CNBC interview.
"We've seen tremendous progress" in lowering inflation and that's pulled forward the likely timing of a rate cut from where he had been expecting it, Bostic said.
The progress on price pressures makes the outlook for policy fluid, Bostic noted.
If inflation makes strong progress moving back toward 2% "I'll be willing to pull [rate cut expectations] forward even further, but I want to see it continue before making that judgment."
Bostic appeared on the television channel in the wake of recent data showing that consumer and wholesale price rises were bigger than expected during January, which challenged the view that inflation is retreating swiftly back to 2%.
Bostic said data like this affirm the need for the central bank to be patient, something it can afford to be given the broader strength of the economy.
Bostic noted he was modestly surprised by the data "but not in a big way."
He foresees more declines in inflation but reiterated the path back to 2% could be uneven.
The recent data means "we just have to be patient and let's not get too far ahead and assume that the job is done, because there's still work to do," he said.
Bostic also told CNBC that ample market liquidity means the central bank can continue to press forward with its work to shrink the size of its balance sheet, but he warned he didn't want to push the process too far.
Reporting by Michael S. Derby; Editing by Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-02-16/
Re: THE FEDERAL RESERVE
REUTERS
"Fed's Barr says supervisors more aggressive, honing in on interest rate risk"
By Pete Schroeder
February 16, 2024
WASHINGTON, Feb 16 (Reuters) - The Federal Reserve's top regulatory official said on Friday that bank supervisors are flagging problems at banks at a higher rate in the past year, and are conducting additional exams at firms facing large unrealized losses.
Fed Vice Chair for Supervision Michael Barr also said that bank examiners are "closely focused" on how firms are managing commercial real estate risk as that sector continues to face post-pandemic pressure.
Nearly one year after Silicon Valley Bank failed due in large part to hefty unrealized losses, Barr said the Fed has been focused on flagging potential problems at banks more quickly.
"The past year has been busy for Federal Reserve supervisors," he said in prepared remarks.
Reuters reported in December that federal bank supervisors had been stepping up their oversight of firms after several banks failed in the spring and issuing additional disciplinary actions to firms, including downgrading confidential bank health ratings.
Barr said the uptick in activity is not due to a change in policy, but rather reflects the changing economic and interest rate environment and what strains it can put on bank finances.
"We want and expect supervisors to help banks focus adequate attention on the areas that matter most for the particular bank," he said.
In addition to extra exams for firms grappling with unrealized losses, Barr said examiners are requiring those firms to take steps to address weaknesses and bolster their capital.
He added a small number of firms "with a risk profile that could result in funding pressures" are being continuously monitored.
He also added that different supervisory teams are heightening their coordination, particularly for regional firms that are nearing the $100 billion threshold, at which point they face stricter oversight.
Firms that are growing rapidly are facing more frequent assessments of their health and policies, as part of an effort to ensure they are ready to meet tougher requirements.
"The goal is that the transition to heightened supervision for fast-growing banks is more of a gradual slope and not a cliff," he said.
Those comments come as New York Community Bancorp saw its stock fall sharply in value after it posted an unexpected quarterly loss in January.
Bank executives said at the time part of the strain was heightened requirements they faced after recently exceeding $100 billion in assets.
Barr said the Fed is still weighing whether it should impose temporary higher capital and liquidity requirements on firms facing risk management issues.
Reporting by Pete Schroeder; Editing by Gareth Jones, Kirsten Donovan
https://www.reuters.com/markets/us/feds ... 024-02-16/
"Fed's Barr says supervisors more aggressive, honing in on interest rate risk"
By Pete Schroeder
February 16, 2024
WASHINGTON, Feb 16 (Reuters) - The Federal Reserve's top regulatory official said on Friday that bank supervisors are flagging problems at banks at a higher rate in the past year, and are conducting additional exams at firms facing large unrealized losses.
Fed Vice Chair for Supervision Michael Barr also said that bank examiners are "closely focused" on how firms are managing commercial real estate risk as that sector continues to face post-pandemic pressure.
Nearly one year after Silicon Valley Bank failed due in large part to hefty unrealized losses, Barr said the Fed has been focused on flagging potential problems at banks more quickly.
"The past year has been busy for Federal Reserve supervisors," he said in prepared remarks.
Reuters reported in December that federal bank supervisors had been stepping up their oversight of firms after several banks failed in the spring and issuing additional disciplinary actions to firms, including downgrading confidential bank health ratings.
Barr said the uptick in activity is not due to a change in policy, but rather reflects the changing economic and interest rate environment and what strains it can put on bank finances.
"We want and expect supervisors to help banks focus adequate attention on the areas that matter most for the particular bank," he said.
In addition to extra exams for firms grappling with unrealized losses, Barr said examiners are requiring those firms to take steps to address weaknesses and bolster their capital.
He added a small number of firms "with a risk profile that could result in funding pressures" are being continuously monitored.
He also added that different supervisory teams are heightening their coordination, particularly for regional firms that are nearing the $100 billion threshold, at which point they face stricter oversight.
Firms that are growing rapidly are facing more frequent assessments of their health and policies, as part of an effort to ensure they are ready to meet tougher requirements.
"The goal is that the transition to heightened supervision for fast-growing banks is more of a gradual slope and not a cliff," he said.
Those comments come as New York Community Bancorp saw its stock fall sharply in value after it posted an unexpected quarterly loss in January.
Bank executives said at the time part of the strain was heightened requirements they faced after recently exceeding $100 billion in assets.
Barr said the Fed is still weighing whether it should impose temporary higher capital and liquidity requirements on firms facing risk management issues.
Reporting by Pete Schroeder; Editing by Gareth Jones, Kirsten Donovan
https://www.reuters.com/markets/us/feds ... 024-02-16/
Re: THE FEDERAL RESERVE
REUTERS
"US inflation data for January made Fed's job 'harder,' Barkin says"
By Howard Schneider
February 21, 2024
WASHINGTON, Feb 21 (Reuters) - Inflation data in January, with consumer and wholesale prices rising faster than anticipated, complicate upcoming U.S. central bank interest rate decisions, Richmond Federal Reserve President Thomas Barkin said on Wednesday.
The reports released last week "underline the challenge we have had in the recent data," with a slowdown of inflation dependent on falling goods prices, while shelter and services inflation has remained sticky, Barkin said in an interview with Sirius XM.
Though he said he was reluctant to put "too much weight" on January data, in particular because of seasonal measurement issues, "it definitely did not make things easier."
"It made things harder."
"You do worry that when the goods price deflation cycle ends you are going to be left with shelter and services higher than you like," Barkin said.
The pace of overall consumer price inflation eased in January, to a 3.1% year-over-year pace compared to 3.4% in December.
But an underlying "core" measure, stripped of volatile food and energy components, remained unchanged at 3.9%; producer price inflation was also stronger than anticipated over the month, as was job and wage growth.
Those numbers were released after the Fed's Jan. 30-31 meeting at which officials held the benchmark overnight interest rate steady in the 5.25%-5.50% range that was set in July, but also opened the door to rate cuts once they had gained "greater confidence" that inflation was "moving sustainably" back to their 2% target.
Minutes of that meeting, due to be released at 2 p.m. on Wednesday, will be read carefully for further details on what those phrases might mean, and how deeply policymakers may have been split among those ready to cut rates sooner rather than later.
Comments by Fed Chair Jerome Powell after last month's policy meeting all but ruled out a rate cut at the March 19-20 gathering.
If there was a constituency for an immediate rate reduction, the minutes of the January meeting would reflect that.
The detailed account of that meeting may also outline the start of a discussion about how and when to end the ongoing drawdown of Fed asset holdings that were increased during the depths of the coronavirus pandemic as a way to keep interest rates anchored at low levels.
Barkin, a voter on interest rate policy this year, did not offer details in his interview on how long he feels the current policy rate may need to remain in place.
While saying he found the last year of falling inflation and continued low unemployment a "remarkable" outcome, he said he also felt it was too early to say that a "soft landing" in which inflation falls without triggering a painful recession and large job losses was assured.
"We still have a ways to go," he said.
"We are not on the ground yet."
Reporting by Howard Schneider; Editing by Andrew Heavens and Paul Simao
https://www.reuters.com/markets/us/us-i ... 024-02-21/
"US inflation data for January made Fed's job 'harder,' Barkin says"
By Howard Schneider
February 21, 2024
WASHINGTON, Feb 21 (Reuters) - Inflation data in January, with consumer and wholesale prices rising faster than anticipated, complicate upcoming U.S. central bank interest rate decisions, Richmond Federal Reserve President Thomas Barkin said on Wednesday.
The reports released last week "underline the challenge we have had in the recent data," with a slowdown of inflation dependent on falling goods prices, while shelter and services inflation has remained sticky, Barkin said in an interview with Sirius XM.
Though he said he was reluctant to put "too much weight" on January data, in particular because of seasonal measurement issues, "it definitely did not make things easier."
"It made things harder."
"You do worry that when the goods price deflation cycle ends you are going to be left with shelter and services higher than you like," Barkin said.
The pace of overall consumer price inflation eased in January, to a 3.1% year-over-year pace compared to 3.4% in December.
But an underlying "core" measure, stripped of volatile food and energy components, remained unchanged at 3.9%; producer price inflation was also stronger than anticipated over the month, as was job and wage growth.
Those numbers were released after the Fed's Jan. 30-31 meeting at which officials held the benchmark overnight interest rate steady in the 5.25%-5.50% range that was set in July, but also opened the door to rate cuts once they had gained "greater confidence" that inflation was "moving sustainably" back to their 2% target.
Minutes of that meeting, due to be released at 2 p.m. on Wednesday, will be read carefully for further details on what those phrases might mean, and how deeply policymakers may have been split among those ready to cut rates sooner rather than later.
Comments by Fed Chair Jerome Powell after last month's policy meeting all but ruled out a rate cut at the March 19-20 gathering.
If there was a constituency for an immediate rate reduction, the minutes of the January meeting would reflect that.
The detailed account of that meeting may also outline the start of a discussion about how and when to end the ongoing drawdown of Fed asset holdings that were increased during the depths of the coronavirus pandemic as a way to keep interest rates anchored at low levels.
Barkin, a voter on interest rate policy this year, did not offer details in his interview on how long he feels the current policy rate may need to remain in place.
While saying he found the last year of falling inflation and continued low unemployment a "remarkable" outcome, he said he also felt it was too early to say that a "soft landing" in which inflation falls without triggering a painful recession and large job losses was assured.
"We still have a ways to go," he said.
"We are not on the ground yet."
Reporting by Howard Schneider; Editing by Andrew Heavens and Paul Simao
https://www.reuters.com/markets/us/us-i ... 024-02-21/