More Waller: Hawkish comments from the Fed Governor
From the original
If shorter run expectations go up, that’s alarming and the Fed might have to take steps There is no way the Fed can go back to the small balance sheet of 2008 The Fed wants to run an ample reserves type system Does not want to go to a scarce reserve system Has not spoken to Warsh
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The current discussion centers on the Federal Reserve's reluctance to provide explicit forward guidance, as noted in Paul Donovan's recent commentary, which highlights Chair Warsh's cautious stance on increasing rates. This suggests a broader trend within the Fed where any hawkish signals are downplayed to avoid market volatility, complicating the central bank's task amid inflationary pressures. Per the full note [source], these sentiments resonate with various Fed officials, indicating that current consumer spending patterns may be more resilient than they seem, yet the underlying data presents complexities. The desk sees this dynamic as critical for shaping trader sentiment and positioning in the upcoming weeks.
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