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Minneapolis Fed President Niel Kashkari said on Friday that he could support another 75 basis points rate hike in July. he also insisted that there is “need to be cautious about too much front-loading on rate hikes.
according to Kashkari, “prudent strategy might be to continue with 50 bps rate hikes after July meeting and Fed would still need to be data-dependent.
“If supply shocks subside, may not need to raise rates as high as otherwise”, he said adding that “I assume we will be able to relax policy somewhat in 2024.” The US dollar’s recovery continues after these comments with the US Dollar Index rising nearly 1% on the day at 104.82.
Other Comments:
“If inflation rifts higher, or supply side does not improve, might need to continue raising rates beyond what currently is forecasted.”
“A steady approach to raising rates may help us avoid tightening more than necessary.”
“I do not think a comparison with the 1970s and 1980s is relevant, because the Fed then had to establish its credibility.”
On the other hand; Kansas City Federal Reserve President Esther George explained on Friday that she dissented against a 75 basis point rate hike because she viewed that move as adding to policy uncertainty simultaneous with the start of balance sheet runoff, as reported by Reuters.
Additional takeaways
“With high inflation and a tight economy, the case for continuing to remove policy accommodation is clear-cut.”
“Inflation has shown no meaningful signs of deceleration.”
“Speed with which we adjust policy rate is important; significant and abrupt changes can be unsettling to households and small businesses.”
“Adjustment speed also has implications for yield curve and traditional bank lending models prevalent among community banks.”
“Sharing FOMC’s strong commitment to bringing down inflation to achieve our mandate for long-run price stability.”
as for the market’s reaction; the US Dollar Index continues to push higher after these comments and was last seen rising nearly 1% on the day at 104.80.
