Analysis by Experts

Fed speakers flag potential for hikes – ANZ


Analysts at ANZ explained that three Fed members (non-voters) flag potential for rate hikes.

Key Quotes:

Williams: expects a rate cut in April and June if all else is equal and data flow continues the way he expects. Since December, Williams described the data on the US economy as “pretty encouraging” and noted “we’ve seen continued good job gains, and improvements in a broad set of labor market indicators”.

Lacker: “Although recent declines in inflation compensation do give me some pause, I think the evidence indicates that inflation expectations (as opposed to inflation compensation) remain wellanchored. Therefore, I am reasonably confident that, barring subsequent shocks, inflation will move back to the FOMC’s 2 percent objective over the medium term. The pace of price gains will move ‘significantly higher’ as oil prices stabilize.”

Lockhart: “There have been encouraging aspects of recent inflation reports that suggest inflation may firm as we get to the back half of the year…these data – taken with my assessment that the economy’s growth is still a bit above the longer-run potential rate – make me optimistic that the Committee’s inflation objective is achievable in the medium term.””

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