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13 May 2015
Fed members still divided on rates lift-off – DB
FXStreet (Edinburgh) - Jim Reid, Analyst at Deutsche Bank, assessed the recent speeches by members Williams and Dudley.
Key Quotes
“There was some more chatter out of the San Francisco Fed’s Williams yesterday, who again reiterated the dependency on data for a first rate move but did note that ‘I see a safer course in a gradual increase, and that calls for starting a bit earlier’.
“Williams also suggested that the Fed’s ability to delay a rate hike is ‘more limited’ before adding that he’s now ‘reasonably confident’ that inflation will move back to 2%”.
“Meanwhile, the NY Fed’s Dudley took a more cautionary stance saying that he was unsure on the timeframe for liftoff”.
“Dudley did however acknowledge that ‘lift off will signal a regime shift even though policy would only be slightly less accommodative after lift-off than it is before’, then going on to warn that ‘I expect that this will have implications for global capital flows, foreign exchange valuation and financial asset prices even if it is mostly anticipated when it occurs’.
Key Quotes
“There was some more chatter out of the San Francisco Fed’s Williams yesterday, who again reiterated the dependency on data for a first rate move but did note that ‘I see a safer course in a gradual increase, and that calls for starting a bit earlier’.
“Williams also suggested that the Fed’s ability to delay a rate hike is ‘more limited’ before adding that he’s now ‘reasonably confident’ that inflation will move back to 2%”.
“Meanwhile, the NY Fed’s Dudley took a more cautionary stance saying that he was unsure on the timeframe for liftoff”.
“Dudley did however acknowledge that ‘lift off will signal a regime shift even though policy would only be slightly less accommodative after lift-off than it is before’, then going on to warn that ‘I expect that this will have implications for global capital flows, foreign exchange valuation and financial asset prices even if it is mostly anticipated when it occurs’.