Comments from Mester in London:
- Recent mixed data suggest downside risks have risen
- International trade policy is new source of uncertainty
- Prefer to see more info before changing stance
- 'A few weak jobs reports' would show the base case shifting
- Economy still likely to perform well in 2019
- It is too soon to determine whether economy is moving to a weak-growth scenario
- Brexit, trade policy, Middle East tensions are among the sources of uncertainty
- US consumer spending trends are positive, housing neutral, business investment negative
- Agrees with Fed's assessment of economic outlook at most recent meeting
- Subdued global growth and stronger dollar weighing on US exports and manufacturing
- Concern over tariffs is growing among Fed business contacts
- Inflation pressures muted, most-recent declines bear watching
If this was Powell talking it would a major shift in the Fed's stance but Mester is a hawk who is holding a hawkish stance. Moreover, she doesn't sound like she's ready to fight tooth and nail against a cut; she's saying that downside risks have risen.
However there is plenty of Fed talk to come between now and July 31 and if others talk like her, then I think the US dollar can make a solid move higher.
