Technical Analysis

More from Fed’s Daly: I don’t know why markets are so optimistic on inflation

  • I don’t know why markets are so optimistic about inflation
  • Inflation risk are still to the upside
  • I don’t see a dramatic slowdown in labor market yet
  • We are resolute to get inflation to 2%
  • I have a higher peak rate therefore, and held longer, then some bond investors have predicted
  • If data comes out better, than policy will adjust
  • It’s important to say we see nothing but hope in the inflation data, not confidence
  • Won’t be confident until see repeated evidence that inflation is truly on path to 2%
  • Everyone at the Fed expects rates to hold for all of 2023
  • we do not want to repeat the mistake of not doing enough to beat inflation
  • so far Fed has not done it too much or too little
  • rates are mostly restrictive territory
  • we can’t wait until inflation gets to 2% before we stop tightening
  • we have to account for policy lags, have to watch data to determine what they are

The Fed is getting annoying.

A year ago they were talking about transitory inflation and were adamant about it. Now they are adamant about permanent inflation.

The market is making a play because it is a living-being. The Fed is dead.

I get it The errors from their text books showed that the Fed thought inflation was dead in the past and that was a mistake.

However, 1980 is not 2020. There is a shortage of workers especially in the service sector. The service sector is working to fix it. They need to increase productivity. If it means shutting the counter at McDonalds and accepting app orders drive thru only, they will figure a way to get out more burgers with less.

It took Williams two days to start to talk about raising the terminal rate or talk about 6%. Why talk about 6% when you all agreed 5.1% was it two days ago?

If they can coin transitory inflation, why not coin permanent inflation because that is what they believe.

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