Fed Chair Powell says US economy has been stronger than expected, this year is remarkable; monetary policy is generally working in ways that the Fed expected though some aspects are different

• Some households and businesses are not feeling higher rates.


• It is hard to draw a direct line from things like higher bond yields to a monetary policy response.


• Fed is not going to ignore a significant bond tightening, but Fed does not have to make a decision now.


• Will be looking carefully at reasons behind the recent yield surge.


• Fed is still trying to judge if it needs to do more; then will consider how long Fed needs to keep rates high. 


• The bigger mistake remains not getting rates high enough.


• Fed is in the range of restrictive policy, question of whether the neutral rate has risen is less interesting.


• The fed-funds rate is around 5.3% and if expected one-year ahead inflation is around 3%, that implies a real rate above 2%. That's "well above" mainstream estimates of the neutral rate, and policy is "probably significantly restrictive".

09 Nov 2023 - 20:14- Fixed IncomeImportant- Source: Newswires