US dollar yen 10 minutes
The USD is slightly lower today as the market sorts out another week of data and Fedspeak.
I spoke with FRB Director Waller, Asia Pacific Trading, and as usual, he was candid. He said the recent CPI report was a reminder that the development of inflation was not certain, but re-emphasized seasonal factors as a likely factor. Waller said more data is needed to confirm whether it’s more signal than noise.
He said policy easing was still expected by the end of the year, and some indicators pointed to slower growth. He wants to see inflation statistics for “a few more months” to see if January was a fluke.
This “couple” explanation is also used by Mr. Harker of the Federal Reserve, who says:
“I think we’re almost there. Please just tell me a little bit.” [of] meeting,”
The market is currently pricing in an 80% chance of a rate cut in June and an 81 basis point rate cut this year. This is essentially consistent with the Fed’s dot plot, which shows a 75 bps rate cut this year.
I don’t think today’s comments are a huge departure from previous comments, but they do focus on economic indicators and serve as a reminder that the Fed will cut interest rates when economic indicators decline.
