- The unemployment rate will be much lower than usual in this case due to low inflation
- The Fed is in a very strong position right now
- The Fed can allow restrictive policy to continue to slow inflation. We expect the process to remain “organized.”
- Families are trying to catch up with previous price increases.
- The pain of rising prices is subsiding and sentiment should follow
- Commodity inflation has returned to pre-pandemic levels
- Services inflation is moving more slowly and no significant declines are expected
- Many economic measures have returned to levels seen in the years immediately preceding the pandemic
- At this point, shorter-term measures of inflation, such as over three and six months, are more important. They point in a positive direction
- It is not comfortable to declare victory. Fed needs to ‘stay diligent’ and ‘short-term minded’
- The top job numbers have been very strong.
- The recent strength in jobs has been focused on a relatively small part of the economy
- Concentrated job growth means a slowdown is occurring. The question is whether overall job growth will fall off a cliff.
- It sees two 1/4% rate cuts by the end of the year (the Fed expected an 80 basis point cut in its latest chart).
- Risks are balanced out as hiring slows, but inflation remains above target. Bias still exists.
- Policy will still need to be tight at the end of the year, but progress in inflation will justify lower interest rates
- He wants to make sure that inflation control is already in place before taking too many steps
- Expectations now do not point to a rebound in inflation, but the Fed still needs to pay attention
Bostick speaks at the Atlanta Rotary Club
As Bostic speaks, US stocks extend to new session highs. The Nasdaq leads the way with a gain of 1.5%. The S&P rose 0.73%. The Dow Jones Industrial Average is still lower but has erased most of its declines and is down just -0.06%. Boeing shares drag this index down -6.36% (representing about 100 Dow points).
Chevron (-1.56%) and JP Morgan (-1.45%) stocks also fell, but 18 of the Dow 30 rose, led by Intel, which rose 3.79% today.
In the US debt market yields are lower:
- The two-year yield is 4.322%, -6.9 basis points
- The 10-year yield is 3.977%, -6.44 basis points
- The 30-year yield is 4.150% -5.0 basis points