BNY’s John Velis expects the Federal Reserve to deliver more easing than markets discount, projecting three rate cuts versus two implied by futures as US labor market conditions deteriorate. He argues that economics, not the new chair’s hawkish or dovish leanings, will drive decisions.
BNY’s John Velis expects the Federal Reserve to deliver more easing than markets discount, projecting three rate cuts versus two implied by futures as US labor market conditions deteriorate. He argues that economics, not the new chair’s hawkish or dovish leanings, will drive decisions.
Velis also warns that altering balance sheet policy or ending reserve management purchases could unsettle funding markets.More cuts than futures imply'Our rate outlook for the rest of this year is more dovish than consensus: We see three cuts compared with two priced by the market, based on our expectation of a deteriorating labor market.''Note that our outlook does not reflect a view on the new chair’s dovish or hawkish orientation, but rather our expectations for where the macroeconomy is heading.''We believe economics, rather than the sensibilities of the new chair, will dictate rate policy.''If and when the macro data reach that point, we don’t think the committee will hesitate to loosen policy in response.''Changing balance sheet policy would require committee consensus and could create instability in money markets if not offset by the Fed’s open market interventions.'
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Bessent says Fed will take its time on balance sheet movesBessent said that the Fed could take up to a year to make decisions on its balance sheet, adding that Kevin Warsh will be a very independent Fed chief.
Read more »
ECB: Dovish rhetoric with high bar for cuts – Societe GeneraleSociete Generale analysts report that several ECB officials have turned more dovish, emphasizing downside inflation risks and potential disinflation from rising Chinese imports. Others warn that a sharp Euro appreciation could prompt a policy response.
Read more »
USD: Defensive bias as data test FedBrown Brothers Harriman (BBH) expects the Dollar to trade defensively this week as US labor market softness and easing inflation support Fed funds futures pricing 50 bps of cuts by year-end.
Read more »
Jill On Money: Warsh named as Fed chair — Should you care?The months-long beauty contest is over: President Donald Trump has named Kevin Warsh to succeed Jerome Powell as Federal Reserve Chair. Before explaining why you should care, a quick rundown of War…
Read more »
NY Fed Consumer Inflation Expectations largely unchangedAccording to the New York Federal Reserve (Fed) Bank, consumer inflation expectations remain tepid looking forward, with a slight decline in the near-term inflation outlook.
Read more »
Fed's Miran: 100% Fed independence impossibleFederal Reserve (Fed) Board of Governors member Stephan Miran noted on Monday that, among other things, the Fed should maintain complete autonomy from political operations. Miran then walked back the outside edges of his own comment, stating that 100% Fed independence is 'impossible'.
Read more »