Creatures from Jekyll Island Watch

 

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Review


The August CPI report came in below expectations, with Core CPI rising 0.1% MoM and headline up 0.2%. Coupled with PPI, the data point to a flat August reading in core PCE, which would lead to a decline in YoY inflation to 1.9% from 2.0% in July.


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Comments from Fed officials this week learned neutral to hawkish. On the more hawkish side were Brainard, Rosengren, & Evans.


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Brainard reemphasizing her view that gradual rate hikes are warranted given the state of the economy and that the short-run R*may be higher than the long-run R* due to the fiscal stimulus allowing the Fed to raise rates above the Committee’s current longer run dots.

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Bostic and Bullard remained staunch doves. Bostic advocated for the FOMC to pause once hitting “neutral” to assess how the economy absorbs the higher rate conditions, while Bullard believed that rates were already near neutral, if not slightly restrictive. Bullard did note that he is considering raising his estimate for potential growth given the incoming data but he did not feel that alone was enough to raise interest rates higher.

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The Creature from Jekyll Island


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-R.W.N II

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