US Consumer Inflation Moderating in January but Services Prices Still Accelerating

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    Comments from the St Louis Fed President

    US households still remain flush, should support consumption
    Looks like we have above-trend growth in Q4
    Better global prospects than just a few weeks ago
    It’s hard to see how unemployment is going to go up, the labor market is strong
    We need to avoid a repeat of the 1970s, must maintain rates at high enough levels to make sure inflation
    Inflation is defined as a quantitative measure of the rate in which the average price level o…Read this Term
    moves down
    Something north of 5% is the lowest level the Fed could use to credibly restrict inflation
    Today’s CPI data was encouraging that we are heading in the right direction
    There’s possibly too much optimism that inflation will come easily back to 2%
    Most likely scenario is that inflation will remain above 2% so policy rate will need to stay higher for longer
    We are really moving into an era of higher nominal interest rates for quite a while in order to get inflation back to target
    Prospects for a soft landing have increased
    Rates will have to stay higher for longer to avoid repeat of 1970s
    I like frontloading policy
    I dont see purpose of dragging things out


    Fed’s Harker:

    Eye-popping inflation numbers now likely in the rearview mirror
    Doesn’t see recession but GDP should slow to 1% this year
    Time of supersized hikes has passed
    Remains concerned about commercial real estate
    Unemployment likely to tick up to 4.5% this year from 3.5% currently
    Unemployment then likely to fall back to 4.0% in 2024
    Labor market in excellent shape

    “We will raise rates a few more times this year, though, to my mind, the days of us raising them 75 basis points at a time have surely passed…hikes of 25 bps will be appropriate going forward.”


    Goldman Sachs note on today’s inflation:

    “We see today’s #CPI report as solidifying the case for a step down to a 25bp rate hike in February.
    We continue to expect 25bp hikes in each of February, March, and May.”

    Helmholtz Watson

    Annual inflation cooled for the seventh straight month to 6.4% in January, however the pace of easing is starting to level off. The prelude to the Jan
    [See the full post at: US Consumer Inflation Moderating in January but Services Prices Still Accelerating]

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