Analysts at TD Securities explained that Fed’s Brainard’s speech repeated that she remains in favour of gradual hikes and overshooting the neutral rate.
Key Quotes:
“Underpinning this stance are tight resource markets, fiscal stimulus and a rising short-term neutral rate.”
“She gave much emphasis to the short-term neutral rate, which could rise above its longrun value and is more important for near-term policy.”
“As such, the speech has a hawkish tilt that was overlooked by markets. Furthermore, despite her international bent, she did not emphasize concerns over global developments (China, EM risks, trade policy), though these do pose a downside risk. As such, the speech had a hawkish tilt that was overlooked by markets.”
“Meanwhile, producer prices disappointed with a 0.1% decline (market:+0.2%) on a sharp decline in food prices, which left core prices up 0.1% m/m.”
Share
