Fed’s Williams (voter) says the US economy is solid, while the underlying labour market is doing well
- Middle East conflict is lifting inflation, though the surge in energy prices is likely short-lived.
- US is currently less sensitive to oil shocks than historically.
- Monetary policy needs to be data-dependent.
- Near-term inflation is around 4%, while core inflation is around 3%.
- Anchoring inflation expectations is critical.
- Sees elevated near term inflation expectations but long term is stable.
- Supply chain disruptions are a concern, which has occurred due to the Iran war.
- Fed must be clear that it is getting inflation to 2%.
- Path for monetary policy depends on data, outlook and risks.
- Monetary policy is well positioned, where the Fed wants it to be.
- Persistently high inflation would call for higher rates but that is not where we are today.
- Better Fed communications improves policy effectiveness.
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