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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
Cleveland Fed Pres Mester's speech today suggests that she is on board with the general participants' consensus that 50bp of further tightening this year is warranted. Implied Fed hike pricing was little changed on the release.
- As was the case prior to the June FOMC meeting, Mester doesn't yet see "balanced" risks between tightening "too much" versus "too little". As of May 31 she didn't see a "compelling" reason to hold rates in June, so it's possible she was one of the members mentioned in the minutes who supported a hike (or grudgingly went along with the decision to pause).
- Notably she thinks "while policy is now in restrictive territory, it is less restrictive compared to many historical tightening cycles" - namely those between 1983 and 2000 - see chart.
- On R-star, she said in a post-event Q&A that there are reasons to think it's moved up in the short run. It's too soon to know about the long run.
- While Mester probably retains her hawkish inclinations, she is in the broad FOMC camp that sees 2 more hikes this year, as per the June projections. (Only 3 of 18 saw more, and she even said today that her tightening outlook "accords with the median view" in the June SEP.)
- She doesn't vote in 2023, but votes in 2024 (though has to retire by May 2024).
Source: Cleveland Fed
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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