• There's good news on the month-to-month data
  • But inflation remains far too high and not near our price stability goal
  • This is why we don’t want to declare victory on inflation coming down
  • Jumping with the idea that 75 bps is what we need and being prescriptive is not optimal
  • A 50 bps rate hike is my baseline
  • Full interview (might be gated)

In looking for a shift, she mentions that what the Fed needs isn't a "good report on inflation" but instead looking for aggregate data to reaffirm that the Fed is moving on "a path to bring inflation down substantially and achieve our price stability target".

This will help to reaffirm the expectations from punters after the reaction to the US CPI data yesterday. Odds of a 75 bps rate hike have fallen considerably and so far, Fed officials are not pushing hard against that. They want to leave the door open as we'll have to run it all back again in September with another round of data before the FOMC meeting.