Fed's Schmid (2028 voter, Hawk) says inflation is the more salient risk for the Fed; can't be complacent about inflation expectations
Importance
Level 1
- There is a real risk that inflation will get stuck closer to 3%.
- Fed must follow through with policy actions to validate stable medium- and long-term inflation expectations
- US economic tailwinds include solid demand momentum, productivity gains, relatively low unemployment
- Can't assume inflation from higher oil prices will be transitory
- Expect 'modest drag' on economic growth from sustained higher oil prices
- US economic resilience should not be underestimated
- Higher energy prices will increase inflation, including core inflation
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