Fed Speakers See Rate Increases As Early As March

The President and CEO of the Federal Reserve Bank of San Francisco Mary Daly has stated that the Federal Reserve Bank does not want to get too far ahead on calling a number of rate increases.

She explained that they definitely see rate increases as early as March because inflation is uncomfortably high. She also explained that it is time to start removing some accommodation and that she sees prices moderating as supply imbalances ease.

Fed speakers will enter blackout on communications this weekend and the markets are already expecting a rate increase as soon as the end of this quarter. The Fed has guided that rates can start to go up as soon as March.

The US dollar, as measured by the DXY index, has moved in on a critical level of daily support and would now be expected to correct higher as follows:

Earlier during Wednesday’s session, Fed Board of Governors’ member and incoming Vice Chairman of the FOMC Lael Brainard recently crossed wires while saying, “Returning inflation to the 2% target is the most important task facing the US central bank.”

The FOMC member said in remarks prepared for delivery on Thursday to a Senate panel considering her for promotion to the vice-chair position, per Reuters.

Key quotes
Our monetary policy is focused on getting inflation back down while sustaining recovery that includes everyone.

Economy is making ‘welcome progress,’ pandemic continues to pose challenges.

Our priority is to protect gains we’ve made, support full recovery.

Committed to pursuing fed’s two goals of price stability, maximum employment.

Committed to independent, nonpartisan status of Fed.

Will support policies that are in the interests of the American people.

Following the release of Lael Brainard’s remarks, AUD/USD prices pause near the two-month high around 0.7290 after rising the most since late November 2021.