The Federal Reserve (Fed) of USA “welcomed” the cooling of the inflationbut will remain patient when it comes to interest rate policy and a potential cut this year.
The president of the Federal Reserve Bank of Dallas, Lorie Loganassured this Tuesday that the recent data showing that inflation is cooling is “welcome news” from the US central bank, but that one can still continue to be patient regarding interest rate policy.
In that sense, the leader pointed out at an event in Austin (Texas), that the Fed will need “several more months of that data to really be confident in our view that we are headed for the 2%” inflation target. “We’re in a good position, we’re in a flexible position to look at the data and be patient,” she added.
Last week, the Fed decided to keep rates in the 5.25% – 5.5% range, where they have been since last July, in an attempt to maintain downward pressure on inflation by keeping borrowing costs at the highest level in more than two decades.
According to inflation data published during that two-day meeting, the consumer prices They did not rise in May compared to April, something that indicates a possible resumption of advances after some “disappointing months”, as Logan described them.
In their latest quarterly projections, which were published last week, the 19 Fed policymakers They foresee a single rate cut this year, instead of the three planned in March. Logan’s statements do nothing more than suggest that she could be open to a cut as early as September, the date on which financial markets expect the Fed to act.
“I think there are still some upside risks to inflation that we need to pay attention to,” slipping that structural changes since the pandemic They surely mean that rates will not return to low levels.
Retail sales data drags bond yields lower
On the other hand, the performance of US treasury bonds fell on Tuesday, after data was released that showed that retail sales in the world’s largest economy grew less than expected last month. The yield of the 10-year benchmark papers fell 6 basis points (bp) to 4.219%, and that of the 30-year debt fell 5.8 bp to 4.352%.
Debt returns fell in five of the last six sessions, as data from different sectors of the economy began to show moderation. U.S. retail sales rose 0.1% last month, following a revised downward 0.2% decline in April.
“I’m not at all surprised that there is a slowdown in consumption,” he told Reuters, Thierry Wizmanby Macquarie in NY. “Some analyzes had suggested that it would be towards the middle of the year when the excess savings accumulated by households after the pandemic would be exhausted. If there is a slowdown in consumption, this would be more or less the right time to wait for it.”
Source: Ambito
