Fed Rate Hike Resumption Risk
Current monetary policy is not sufficiently restrictive given strong demand and investment conditions in the economy
Too little corroboration in the last 3 days to call a trend (9 articles). Watching for it to gain traction.
Warsh stated explicitly that financial conditions do not appear sufficiently restrictive given the strength of demand and investment activity across the economy, implying that current short-term interest rates may need to rise further. This assessment suggests the Fed's real policy rate remains too accommodative relative to economic conditions.
When Fed officials signal that policy is not yet restrictive enough, it typically extends the duration of elevated rate expectations and increases the probability that terminal rates will be held higher for longer, which pressures long-duration bond valuations and encourages investors to demand higher term premiums.
"He did suggest that interest rates currently aren't restricting economic activity, pointing to robust business investment in AI equipment and infrastructure and strong consumer spending... his speech indicated that rates may not be high enough to bring inflation down to the Fed's two per cent target."
"But he did suggest that interest rates currently aren't restricting economic activity, pointing to robust business investment in AI equipment and infrastructure and strong consumer spending... his speech indicated that rates may not be high enough to bring inflation down to the Fed's two per cent target."
"Warsh also said that "short-term interest rates are the predominant tool" for the Fed to do its twin jobs. And he said, "I would be hard pressed to describe broad financial conditions as restrictive," implying that short-term interest rates are not high enough to tamp down the economy and inflation."
"Warsh said 'I would be hard pressed to describe broad financial conditions as restrictive,' an implication that short-term interest rates may not be high enough to tamp down the economy and inflation."
"Warsh said, 'I would be hard pressed to describe broad financial conditions as restrictive,' an implication that short-term interest rates may not be high enough to tamp down the economy and inflation."
"Warsh also said Friday that 'I would be hard pressed to describe broad financial conditions as restrictive,' an implication that short-term interest rates may not be high enough to tamp down the economy and inflation."
"He did suggest that interest rates currently are not restricting economic activity, pointing to robust business investment in artificial intelligence equipment and infrastructure and strong consumer spending."
"Hammack went on to say that current rates, ranging between 3.5% and 3.75%, are not 'meaningfully restricting' the economy at the moment. 'When I'm talking to businesses, I'm not hearing that they're sensing any restraint from investments in growth based on where interest rates are,' she said. 'So to me that says that now is the time to act.'"
""Given the strength of demand and investment, I do not see the current stance of monetary policy as restrictive,""