Has the Fed pivoted?

Advertisement

BofA with the speculation:

A tenuous but remarkable change in communication

We saw a notable change in communication from the Fed in recent weeks as financial conditions have tightened sharply (see Exhibit 1), the economic outlook has deteriorated moderately (see more “stag”, more “flation”) and the threat of runaway inflation appears to have subsided (for now) with a potential peak in YOY CPI back in March. In a 13 May speech, Cleveland Fed President Mester argued that “If by the September FOMC meeting, the monthly readings on inflation provide compelling evidence that inflation is moving down, then the pace of rate increases could slow, but if inflation has failed to moderate, then a faster pace of rate increases may be necessary.” Earlier this week, Atlanta Fed President Bostic said a pause in September might make sense.

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.