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2022-05-11

A soft landing - possible but unlikely. Wolf and Dudley

 “The 8.5 per cent increase in the consumer price index in the 12 months through March is much faster than the pace of nominal wage growth, leading to the fastest declines in real wages over a year in at least 40 years.”

This view that a significant recession will not be needed to curb inflation is optimistic. But this is not the only form of optimism on display today. The other is the belief that such a recession can be avoided.

Martin Wolf FT 10 May 2022

https://www.ft.com/content/1b71d690-86a9-4315-ae67-57876acc6161


If underlying inflation remains high, reaching neutral will require the Fed to take rates much higher than 2% to 3%

 It’s hard to imagine that the Fed can address persistently above-target inflation without taking interest rates high enough to significantly loosen an extremely tight labor market. 

Bill Dudley Bloomberg 11 maj 2022

https://www.bloomberg.com/opinion/articles/2022-05-11/the-federal-reserve-needs-to-get-real-about-interest-rates

Bill Dudley Bloomberg Opinion columnist and senior adviser to Bloomberg Economics, is a senior research scholar at Princeton University’s Center for Economic Policy Studies. He served as president of the Federal Reserve Bank of New York from 2009 to 2018, and as vice chairman of the Federal Open Market Committee. He was previously chief U.S. economist at Goldman Sachs.


The last soft landing came in 1994

John Authers Bloomberg 4 maj 2022

https://englundmacro.blogspot.com/2022/05/the-last-soft-landing-came-in-1994.html


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