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The macroeconomic situation worsened but started balancing with the latest inflation data. We should closely follow Fed statements to understand the details in the upcoming Fed minutes on Wednesday. As of writing, Fed members continue to make statements.
Fed Members’ Statements
Inflation was high in the first quarter, putting pressure on risk markets, including the cryptocurrency markets. Both macroeconomic issues and war concerns triggered significant outflows in the ETF channel. The sale of ETF assets by bankrupt companies was also a serious issue. Now, net inflows are dominant again in the ETF channel, and things are improving on the macroeconomic front. So, what are the latest statements from the members?
As of writing, member Waller from the Fed spoke, and the published speech does not include details on economic policy. Bostic and Barr made some important comments. The highlights of Fed member Bostic’s statements are as follows:
“Inflation data for the first part of the year has been quite volatile. Business leaders tell me things are slowing down but very slowly. It will take some time for the economic momentum to show its effect. Pricing power is weakening. My view is that inflation will continue to decrease this year and into 2025. Our new stable interest rate situation will likely be higher than people have been accustomed to over the past decade. We have a long way to go on inflation. The Fed is open to all possibilities regarding the economy’s direction. Risks are currently balanced. Our policy stance is restrictive.”
The important parts of the statements made by Barr from the Fed are summarized as follows:
“Regulators are exploring targeted adjustments in current liquidity rules. Regulators are considering requiring large banks to hold minimum reserves and pre-positioned collateral at the discount window. Larger banks will need to have existing liquidity to cover uninsured deposits. First-quarter inflation was disappointing, not providing the confidence needed to ease monetary policy. The Fed will need more time to continue its tight policy. I am vigilant against risks to both inflation and employment mandates. The current approach is prudent to manage both risk groups. The Fed is well-positioned to monitor the economy and remain stable. The Fed does not want to approach a balance sheet size that would hinder controlling the interest rate. Most funds in the private credit market do not come from highly leveraged institutions and do not carry bank-run risk.”
