- 50 bps is reasonable, 75 bps is ok, I doubt 100 bps is called for
- Says he's hopeful they can do 50 bps in Sept end then continue with 25 bps hikes until the beginning of Q2 2023
- There's still a reasonable expectation that tightening into next year will lead to a restrictive setting but allow for reasonably strong labor market
- I see policy rate between 3.75-4.00% by the end of 2023
- It's possible we get a soft landing but there are a lot of risks
- We need to start getting less-ugly inflation reports soon
- I have downgraded my economic growth projections somewhat for this year, probably looking at 1% or lower
- I think unemployment will stay below 4% this year
Bond yields have reversed dramatically today with 2s now just shy of 3% after touching 2.81% earlier. Some of that might be risk aversion around China reversing but these Fed comments highlight the upside risks to the terminal rate. Evans is talking about 4% at the end of 2023 while the market is at 2.85%.