Fed's Beige Book supports a 25 bp hike next month – BBH
|BBH Global Currency Strategy offers a brief analysis of the Federal Reserve's (Fed) Beige Book released on Wednesday, which showed that economic conditions had somewhat cooled in recent weeks while inflation continued to run relatively hot.
Key quotes:
“On Overall Economic Activity: Nine Districts reported either no change or only a slight change in activity this period while three indicated modest growth. Lending volumes and loan demand generally declined across consumer and business loan types. On Labor Markets: Employment growth moderated somewhat this period as several Districts reported a slower pace of growth than in recent Beige Book reports. Wages have shown some moderation but remain elevated. On Prices: Overall price levels rose moderately during this reporting period, though the rate of price increases appeared to be slowing. Consumer prices generally increased due to still-elevated demand as well as higher inventory and labor costs.”
“WIRP suggests around 90% odds of 25 bp hike at the May 2-3 meeting, up from 80% at the start of this week, 70% at the start of last week, and 50% at the start of the week before that. Despite these rising odds, one cut is still priced in by year-end. While down from two cuts at the start of last week, this needs to be completely priced out. The Fed will have a lot of time and data before having to make a decision in June. Between the May 2-3 and June 13-14 meetings, the Fed will have digested two more job reports, two CPI/PPI reports, and one retail sales report. A pause in June might just be the most likely outcome but it really will depend on how all that data come in. Waller, Mester, Bowman, Logan, Bostic, and Harker all speak today. Cook speaks tomorrow. Then at midnight tomorrow, the media blackout goes into effect and there will be no Fed speakers until Chair Powell’s press conference May 3.”
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.