Fed’s Barr says policy needs recalibration, more adjustments likely
Federal Reserve (Fed) Governor Michael Barr said on Tuesday that “there is a need to recalibrate policy” and that the base case is that “further policy adjustments” are likely needed.
In his speech, Barr added that he expects GDP to pick up from 2% in the first half of the year, and stated that the labor market is solid, “supported by business investment and consumer spending.”
Money markets have priced in a nearly 66% chance of a rate hike by the Federal Reserve at the October meeting, according to Prime Terminal. For the December meeting, the odds for a rate increase are at 94%.
Key highlights:
He expects GDP growth to 'pick up a bit' in second half of year, from 2% pace in first half
Risks to achieving inflation target have increased, risks to labor market have receded
There is a need to recalibrate policy; base case is that further policy adjustments likely to be needed
Labor market solid, supported by business investment and consumer spending
Inflation is a key concern; fed has been 'knocked off course' to 2% goal
Does not see a clear trend toward a timely return to 2% inflation
Makes sense to pencil in AI productivity boost in medium term, but difficult to project how or when
Says he is optimistic AI will boost productivity in the longer term
Too early to know if AI will push up neutral rate of interest
AI buildout likely to be a strong boost to us economic activity in next year or so
Should be prepared for serious short-term disruptions in labor market from AI
Broad productivity gains from AI may take some time
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.46% | 0.36% | 0.06% | 0.17% | 0.74% | 0.70% | 0.43% | |
| EUR | -0.46% | -0.10% | -0.41% | -0.31% | 0.27% | 0.25% | -0.04% | |
| GBP | -0.36% | 0.10% | -0.31% | -0.18% | 0.36% | 0.34% | 0.06% | |
| JPY | -0.06% | 0.41% | 0.31% | 0.13% | 0.68% | 0.64% | 0.37% | |
| CAD | -0.17% | 0.31% | 0.18% | -0.13% | 0.55% | 0.52% | 0.25% | |
| AUD | -0.74% | -0.27% | -0.36% | -0.68% | -0.55% | -0.03% | -0.31% | |
| NZD | -0.70% | -0.25% | -0.34% | -0.64% | -0.52% | 0.03% | -0.26% | |
| CHF | -0.43% | 0.04% | -0.06% | -0.37% | -0.25% | 0.31% | 0.26% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
