Dudley in a TV interview 08.02.2018

  • The global economy is doing fine
  • Decline in equity markets doesn’t have economic implications at this point; 
  • bond yields moving higher is putting pressure on stocks
  • ‘Further’ gradual hikes mentioned in Fed statement meant Fed has more economic confidence
  • Tax cut package does help increase confidence
  • A More Persistent Stock Fall Could Affect Spending
  • More Confident On Need To Remove Accommodation
  • Doesn’t put to much weight in one wage report
  • To support a March rate hike , he needs confidence that the Us economy continues to grow above trend
  • Views On Rate Hike Could Be Changed By Weakening Economy
  • Main outlook for three rate hikes is reasonable; could do four hikes if economic outlook gains
  • Was surprised about how low the rates were prior to this move
  • Bond yields rises are reflecting the Fed’s rate outlook
  • The gap between the Fed and market expectations on rates is fairly small
  • Tight labour market will boost inflation
  • If we were to move inflation goal, could hurt Fed credibility
  • There is a risk that the economy overheats which could push down unemployment and push up inflation, causing Fed to tighten harder
  • Powell’s Transition To Fed Chair To Be Smooth, Says He Is On The ‘Same Page As Yellen
  •  Change In Chair Will Be ‘Evolution, Not Revolution’

They all have A LOT to say today . During Dudley’s intervention USD whipsawed 20 pips up n down . As we stand now:
EURUSD 1.2245
CABLE 1.3010
USDJPY 108.77
AUDUSD 0.7788
NZDUSD 0.7210
USDCAD 1.2608
USDCHF 0.9375

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