Anthony Chan
Anthony Chan
actual budding control evidence exactly fear fed greatest likely lost moderate recovery shows
Going into this report, many analysts greatest fear was that the Fed may have lost some control of this budding recovery. The actual evidence shows that a moderate recovery is exactly what we are likely to get.
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I think the (PPI and core PPI) numbers will make the Fed a bit more comfortable that the status quo is fine, ... The core PPI is the one they really care about. It's really telling us that the inflation story is not running away from us. That doesn't mean the debate won't be heated. But this number does tilt the apple cart.
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The Fed is justified in being aggressive. We're in uncharted waters here.
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In view of the stimulus already out there, I think the Fed will finish out the year by raising rates until the end.
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Given our forecast, we do not expect that this statistical release will have much impact on the policy debate when the Fed meets,
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The Federal Reserve and energy prices really have the fate of the economy in their hands.
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I think the Fed certainly looks at this as building up as pricing power on the part of companies, ... But (the price index) is still within the tolerable range for the Fed. That's not to say the Fed can relax and go on vacation, but I would say they're a relatively benign.
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All the focus is on the core number. The Fed said yesterday that energy has not worked its way down to core consumer prices.
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I think if we get another 0.3 rise in the core CPI, I think the Fed will want to draw line in the sand, ... The Fed statement shows there are a lot of anxious parties at that meeting willing to be (more) aggressive.
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The Fed is likely to continue to raise rates for much of the year 2005.
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I don't think the recovery is in danger. But I think what we have here is a situation where the Federal Reserve will probably look at the numbers a lot more closely. If we see another two or three economic statistics that surprise us, yes the Fed can pause and not raise rates in August.
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Continuity is all but assured. The Fed has worked hard to win credibility and Greenspan is not going to throw it away in the final few months of his term.
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I think that if the Fed goes back to normal language about 'measured pace' (of rate hikes), it becomes a secondary story, ... It is only becoming a big story because of the uncertainty about what they were going to do. The equity markets will be looking for language here again. If it talks too harshly about inflationary pressures, it could be unfriendly for stocks.
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I think the markets probably overreacted when the Federal Reserve first moved toward a neutral operating directive. When Alan Greenspan spoke this time, I think the reality set in and that is, yes, the central bank has a neutral directive, but it's more like an ultra-right (hawkish) form of neutral directive. ... Any time they get an excuse to raise rates, they're going to take it.