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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
The bottom line for St Louis Fed Pres Bullard: is that "according to the calculations presented" in his presentation today, "Getting Into The Zone", "the policy rate is not yet sufficiently restrictive even under the most generous interpretation."
- He provides this chart of the current Funds rate with the Taylor rule under assumptions that are "generous" (using trimmed mean PCE as the inflation rate, pre-pandemic R-star of -50bp, and 1.25x as the parameter describing policymakers' reaction to deviations of inflation from target) vs less generous (using core PCE as the inflation rate, a +50bp real interest rate, and 1.5x as the policy reaction parameter).
- The generous assumptions plugged into the Taylor Rule provides a 5% recommended policy rate, with the less generous scenario pointing to 7%.
- There's little doubt that rates will rise from the current 4% - but Bullard's analysis suggests a destination that is well above the market-priced terminal rate.
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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