We had some IT issues at investingLive today but we’re back in business and while we were gone a trio of Fed speakers weighed in.
I’ll stick to just the highlights and meaningful comments. Hammack has been in a hawk in the past but really doubled down today:
- We should be very cautious in removing policy restriction
- I expected 4.3% unemployment to ‘rise a bit’ but we’re near full employment now
- We are missing inflation by a more-meaningful number
- I have one of the highest estimates of neutral, and believe we’re only modestly neutral
- Layoff notices have not been trending up
- There are signs of fragility in the jobs market
- If we remove restrictions too quickly, I am worried about inflation
- Likely to see inflation continuing to rise
- Lower income households are struggling
There is a clear position here and it’s that the economy is fine and inflation is still high, so it’s no time to be cutting rates.
Miran spoke on Friday but dove a bit deeper into his thinking on rates:
- Policy is ‘considerably restrictive’ and ‘very restrictive’
- Short term rates are roughly 200 bps too high
- Expects H2 and early 2026 growth to improve
It’s tough to even make a read on Miran but he’s a Trump mouthpiece and will do what he’s told.
Barkin:
- Wage pressure is steadily coming down
- Expect workforce growth this year to be close to flat
- Expect the current low-hiring, low-firing labor market to continue but could break in either direction
- Business optimism has ticked back up
- Low unemployment, wage gains and stock prices all supporting consumer spending
Barkin sounds upbeat and he’s often a good gauge for the core of the Fed’s thinking.
