“Labor market developments cannot explain the decline in nominal spending growth. Tighter monetary policy can… Given the lags of monetary policy, the Fed may have already undershot its target.” ~William J. Luther
“Despite the progress made on inflation over the last three months, and the risk of overtightening noted by Waller and Powell, the FOMC is unlikely to cut its federal funds rate target next week.” ~William J. Luther
“Prices today are 8.9 percentage points higher than they would have been had the Fed hit its 2-percent inflation target since January 2020.”
“Just as the FOMC was slow to adjust policy when inflation surged in late 2021, it will be slow to adjust policy as inflation returns to and falls below its target in 2024.” ~William J Luther
“While inflation is declining once more, members of the Federal Open Market Committee (FOMC) have suggested rates would need to remain high for longer than they had previously projected.” ~William J. Luther
“Market participants continue to expect the Fed will cut its federal funds rate target this year — just not anytime soon.” ~ William J. Luther
“Market participants continue to expect three cuts this year — and that those cuts will begin in the first half of the year. But they have adjusted the odds.” ~William J. Luther
“The Fed should be looking ahead and adjusting monetary policy in light of its forecasts. Instead, its eyes are fixed on the rear-view mirror.” ~William J. Luther
“Monetary policy remains very tight. Interest rates are much higher than they were just prior to the pandemic. And the Fed is no longer accommodating expansionary fiscal policy.” ~William J. Luther
“The FOMC changed course last week, foregoing a previously projected rate hike and projecting deeper rate cuts in 2024 than previously anticipated. But those rate cuts may come too late.” ~William J. Luther