While the U.S. economic calendar last week was relatively light, the Federal Reserve members spoke at length over the week which stood out. Many members have maintained the view that the markets can expect another two rate hikes from the central bank this year.
Here’s a quick summary from various Fed officials who spoke during the week.
San Francisco Fed President, John Williams: Williams, speaking at the Forecasters Club of New York said that he expects a “relatively modest” boost to the economy stemming from Trump’s policies but cautioned that a bigger than expected boost to fiscal stimulus plans could push the economy to outperform.
As a result, he said that he expects “three to four rate increase total for this year or two to three more for the rest of the year.” Williams’ comments were quite hawkish as he said that there were clearly some upside risks to the economy.
On the labor market, Williams said that he was surprised by the strong pace of job growth in recent months. Williams said he expects the economy to add less than 100k jobs per month in the near term. “I still see us basically close to full employment,” he said.
Boston Fed President, Eric Rosengren: Rosengren was speaking to Bloomberg following a speech. He remained favorable towards more rate hikes noting that he expects four rate hikes this year as being seen as “gradual.” That is one extra hike than what the Fed has signaled so far.
Rosengren said that he was concerned with the valuations in the commercial real estate but added that it remained low by historical standards.
The Boston Fed president said that the U.S. economy was robust enough to digest four rate hikes.
Chicago Fed President Charles Evans: Evans said that an economy that can outperform growth and inflation is able to withstand a higher and steeper path of interest rates.
Evans, however, expressed concerns that inflation will continue to undershoot the target for the next few years, despite the overall outlook being slightly improved. The inflation along with the lower unemployment rate was the reasons he said that were supportive of the rate hikes.
Read more: https://www.orbex.com/blog/2017/04/fed-members-maintain-views-two-rate-hikes-year/