Fed's Williams: The economy is in a ‘pretty good place’

The consumer has been very resilient, a more severe slowdown in business investment could hit households.
Eyes scrutinizing US data, US dollar walking a tight-rope.

New York Federal Reserve Williams says recent rate cuts position policy to ‘appropriately’ address risks from trade uncertainty, global slowdown and low inflation.

Key comments:

The economy is in a ‘pretty good place’ and policy will be set on a ‘meeting by meeting’ approach.
Inflation is moving up a little bit but sees no real signs of inflation taking off.
Consumer has been very resilient, boosted by positive income growth, job gains and asset prices.
A more severe slowdown in business investment could hit households and slow consumer spending.
Standing repo facility alone would not solve problem of low reserves.
Adding reserves through temp repo operations doesn’t get liquidity moving in same way as having higher level of reserves.

FX implications:

Despite William's comments on the consumer, we have started to see some disappointments in the most recent consumer data which adds to a series of disappointments elsewhere in the economy, fuelling the likelihood of additional rate cuts from the Fed.

"The Philly Fed business survey slipped to 5.6 in Oct from 12.0 in Sep but forward components were firmer. Sep housing starts were lower than expected (-9.4%m/m, est. -3.2%m/m), but Aug revised to +15.1%m/m from +12.1%m/m. Permits were also similarly revised and relatively firm (-2.7%m/m, est. -5.3%m/m, prior revised to +8.2%m/m from +7.6%m/m)," analysts at Westpac noted, adding, "markets are pricing 20bp of easing at the 31 October meeting and a terminal rate of 1.24% (vs 1.88% currently)." Moreover, Williams has pointed out earlier, (Federal Reserve's John Williams: Will adjust plan for money markets ‘as appropriate’), that rates are low already - That is a dangerous cocktail for the US Dollar which is already walking a tight-rope.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.