Fed's Kashkari: Inflation moving sideways raises questions about how restrictive policy is

Eren Sengezer FXStreet

Minneapolis Federal Reserve President Neel Kashkari said on Tuesday that inflation moving sideways raises questions about how restrictive policy is, per Reuters.

Key takeaways

"Housing market is proving more resilient to tight monetary policy than it has been in the past."

"Possible that housing market resilience means neutral rate has been pushed higher at least in the short term."

"Inflation progress seen in latter half of 2023 appears to have stalled; question is whether disinflation is still underway or just taking longer."

"Recent slow GDP due to inventories and net exports; underlying demand remained strong."

"Yield curve inversion does suggest that policy is tight."

"Among factors sustaining housing market are inadequate supply, and demand possibly boosted by immigration, work from home arrangements."

"Inflation moving sideways raises questions about how restrictive policy is."

"Policymakers misperceiving the current neutral rate could explain current data."

Market reaction

These comments don't seem to be impacting the US Dollar's valuation. At the time of press, the US Dollar Index was unchanged on the day at 105.10.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.