Fed's Williams (voter) says higher energy prices are lifting costs and inflation. No obvious argument to alter interest rates currently.

Inflation/Prices

Inflation is up, "quite a bit".
Anticipates inflation peaking in the next few months. Should be elevated for the remainder of 2026, and then lower in 2027.
Goods, energy, tech and AI are lifting inflation.
Much of the price pressures are due to computer-related price increases, and tariffs.
Not particularly concerned about the persistent impact on inflation, of energy, thus far. Hopes that energy upside stabilises.
Upside risks to inflation have increased.

Job Market

Describes it as "healthy".
Market has stabilised.

Economy

Solid growth around 2%.

Monetary Policy

Is in the correct place, no need to move rates.
No obvious argument to alter interest rates currently.
Current policy is "modestly" restrictive.
If conditions in the economy change, the Fed would then need to respond.
Bond market will need to make an assessment on policy. Market has been dependent on data.
"Not far" from a neutral rate.

New Chair

Williams does not intend to change his public speaking work under Warsh.
Fed does not have groupthink.

What our latest note said

US Market Open, 21 Oct, 10:29 UTC · what it led with

Pakistan Army Chief Munir brought the "final warning" from the United States to Iranian officials, which called on Iran to submit to the US demands for concessions on the nuclear issue before taking any other steps.

The UK government has approved the Jackdaw North Sea gas field.

Headlines that moved markets

Headlines from our feed, and what the market did next.

Riksbank maintains its rate at 1.75% as expected; assesses that the probability of a rate increase later this year remains; there is considerable uncertainty and developments call for vigilance

EUR/SEK+0.3%

Norges Bank maintains its rate at 4.25% as expected; may still become necessary to raise the policy rate

EUR/NOK+0.6%

Iran and US talks continue, and reports that the deal is close are wrong.

WTI crude+1.5%

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