The voting member of FOMC, Daniel Tarullo, has spoken today. Below the key points of his speech:
- He is more inclined to think that employment can improve more
- Brexit referendum brings a lot of uncertainty and is a factor for rate decision
- does not accept the secular stagnation argument as a reason for rate setting
- hard to know in real time where full employment lies
- wage growth in last few years hasn’t been as strong as hoped
- Fed would retain retain substantional accomodation with hikes
The comments from Tarullo are important because he usually avoids speaking on monetary policy. His speech is definitely dovish and underscores that FOMC may not raise hikes in June due to Brexit risk and he still expects improvement in labor market. Nevertheless, USD in last hours erased all its losses vs EUR.
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