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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FED
Atlanta Fed Pres Bostic's comments to MNI yesterday shouldn't be interpreted as entirely dovish.
- Yes, he pencilled in unchanged rates through 2023 in his June economic projections, making him one of the two most dovish members for rates this year (2 of 18 saw rates at 5.00-5.25% - see table below). But just by seeing no cuts next year he's arguably one of the 6 most hawkish for 2024 (in June, 6 participants saw rates at 5.00-5.25% and above, with 3 on that level, 2 at 5.50-5.75% and 1 at 5.75-6.00%).
- Indeed by the logic of the dot plot, he well may be the only member who doesn't see cuts next year (at most it's 2), vs nearly 150bp of 2024 cuts pencilled into the implied rates curve.
- Bostic told MNI his forecast sees unemployment rising slightly to 4.0% by yearend and 4.3% by the end of 2024 - vs medians of 4.1% and 4.5% respectively. Headline PCE inflation will "steadily come down" to 3.5% this year (FOMC median: 3.2%) and 2.7% next year (median: 2.5%), with core PCE at 3.8% this year (3.9% median) and 2.7% next year (2.6% median), he said, characterizing the inflation narrative as "a bit more positive" than some of his colleagues are feeling, given improvements in underlying inflation metrics.
- That said, his economic forecasts may inform his relative preference to hold rates for longer: he told MNI that while lags mean existing policy tightening will take time to manifest, inflation "will just take a lot longer to fully resolve than I think some people are hoping for in their projections".
June 2023 SEP Federal Funds Rate End-Year ProjectionsSource: MNI, Federal Reserve
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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