US Fed's Jerome Powell speaking at WSJ event 23 June 2015
- We are coming off a good two years of growth
- Wants to see further tightening of the labour market
- Wants to see inflation stabilising further
- Wants to see these tests being satisfied around about September
- Strong dollar is weighing on growth and exports
- That headwind will continue
- If sees stronger growth and the economy reaches his other goals September would be his ideal lift off, chances are 50/50
- Pace of rate rise will be gradual, pace is dependant on the path of the economy
- Won't fall back into mechanical raising of rates but will be more responsive to data
- Will be a while to see Fed funds rate return to a level of normality
- December rise is more uncertain than where we are now
- Fed forecast is for two rate hikes, Sep & Dec
- All forecasters, not just Fed, have over-estimated growth forecasts
- Fed does not measure GDP particularly well over short term
- There's a significant possibility that unemployment will fall faster than expected this year
Powell is neutral/hawkish on the scale but he's talking very hawkish at the moment. Mentioning two hikes before the end of the year is giving the buck a boost as it puts the dollar bulls back on track
USD JPY has traded up to 124.01
