Fed banker not even thinking about interest rate cuts
Many investors on Wall Street are convinced that the interest rate peak has finally been reached. The president of the San Francisco Fed district is now putting a damper on hopes. Under no circumstances should there be any back and forth.
US monetary watchdog Mary Daly sees no need to discuss an easing of monetary policy at the moment. "I'm not thinking about interest rate cuts at all at the moment," the president of the US Federal Reserve's San Francisco district told the "Börsen-Zeitung" in a recently published interview. She added: "I am thinking about whether we have enough tightening in the system and are sufficiently restrictive to restore price stability." Recent inflation data had been "encouraging". However, inflation has not necessarily been defeated yet.
"The worst thing we can do to Americans, whether it's businesses, households, consumers or community groups, is a stop-start monetary policy. In doing so, we would stop the rate hikes, but then realize we're not done yet and then have to do more work later," said the US monetary watchdog.
Meanwhile, Daly's New York Fed colleague John Williams pointed out at a conference that the central bank is guided by the data situation. If price pressure proves to be more persistent than expected, further tightening could become necessary. However, he believes that the Fed has already reached the interest rate peak or is at least close to it.
Stock market believes in first interest rate cut in May
The futures markets are currently expecting the Fed to keep key interest rates in the range of 5.25 to 5.50 percent at its meeting in mid-December. A first rate cut is considered likely for May 2024. The key monetary policy rate could then fall to a range of 5.0 to 5.25 percent. Fed Director Christopher Waller recently emphasized that there are good economic arguments for monetary easing if inflation continues to fall for a few more months. However, he did not want to commit himself to a specific period of time.
One measure of inflation that the monetary authorities are keeping a close eye on is consumers' personal spending. This excludes food and energy costs, which are susceptible to fluctuations. This so-called PCE core index fell to an annual inflation rate of 3.5 percent in October, after 3.7 percent in September.
Source: www.ntv.de
