Ahead of Sept US Fed meeting, policymakers sit tight on rates, debate if more needed
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DATA AND FORECASTS Fresh Fed forecasts to be published at the close of this month's meeting will show how policymakers as a group expect inflation and unemployment to behave, and whether they like Logan think further tightening is likely to be needed. In June, the last time the Fed published economic projections, two-thirds of Fed policymakers indicated they thought rates would need to rise to above 5.5% by year's end in order to bring inflation down sustainably to the Fed's 2% goal. "It's still an open question as we go forward: Have we got sufficiently restrictive to achieve that," New York Fed President John Williams said on Thursday.
Williams, like others, said he's watching the data closely to guide policy. Chief among data to be released before the upcoming meeting is a read on the Labor Department's Consumer Price Index next Wednesday, which is expected to show inflation by this measure having ticked up to 3.6% last month due largely to higher gas prices. Underlying price pressures, however, likely continued to cool, according to a Reuters poll of economists.
Other data expected next week include retail sales and the Producer Price Index, neither of which are expected to challenge progress towards what Chicago Fed President Austan Goolsbee calls the "golden path" of slowing inflation without a recession. Still, rate-setters are on the lookout for potholes, including a potential autoworkers strike that could, Goolsbee says, have a material impact on policy. On the other side of the ledger, unexpectedly strong data in coming weeks and months could firm up the case for another rate hike before the end of the year.
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