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FX.co ★ James Bullard – another batch of "hawkish" statements

James Bullard – another batch of "hawkish" statements

James Bullard – another batch of "hawkish" statements

Since the Fed meeting is already over, members of the monetary committee can comment and speak in public. It is what the Fed's chief "hawk" James Bullard took advantage of. The head of the St. Louis Fed noted yesterday that the Fed would continue to raise the rate until it sees a significant slowdown in inflation and realizes that there are real prospects for its return to the target level. "We will remain tough in our monetary approach and are ready to take decisive action," Bullard said. It's hard to believe, but Bullard's rhetoric has become even more hawkish in recent weeks. This time, he said that rates are likely to remain high for a longer period than previously assumed to ensure inflation has started to decline. Earlier, Bullard campaigned for the fastest possible rate increase to the highest possible levels so that he could slowly lower the rate next year, returning it to a neutral level. However, recent inflation reports have clearly shown that the rate should not be lowered but raised since there has not been a single month for the consumer price index to show a significant slowdown. Thus, we may potentially face not only high Fed rates, but also a longer period of validity of these highest rates. Recall that earlier, Bullard was the first to indicate that the rate may have to be raised above 3.5%.

The head of the Federal Reserve Bank of San Francisco, Mary Daly, also made a speech yesterday. She noted that the fight against high inflation has not yet been completed. In her opinion, the markets expect a rate cut next year, and she also admits the option of raising the rate to 4%. Recall that earlier, we already discussed the need to raise the rate to 4% because at the moment, at a rate of 2.5%, inflation shows no desire to slow down. But about a possible recession, Daly frankly doubts. She expressed hope that inflation would be extinguished without provoking a recession but was very "soft" in her comments on this issue. At the same time, she noted that at this time, there is no reason to expect a hard landing in the economy. Ms. Daly also does not support Bullard's approach and believes that rates should be raised gradually, not sharply, to start lowering them in a few months. But she also noted that the period of high rates might take longer than previously expected. Thus, everything will ensure that the Fed's aggressive approach will continue, but it will have to become softer starting in September. From our point of view, this is quite enough for the US stock market to resume its decline.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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