Inflation: The Comedy of Errors in Monetary Policy 🎭💸

Ah, the illustrious Christopher Waller, a veritable oracle of the Federal Reserve, has graced us with his wisdom, advocating for a delightful pause in the symphony of interest rate cuts, as inflation dances chaotically across the stage of our economy. How charmingly unpredictable! 🎩

In a speech delivered on the 17th of February in the sun-kissed land of Sydney, Australia, Waller lamented the “disappointment” of January, where inflation’s progress was as uneven as a drunken tightrope walker. Yet, he tantalizingly hinted that if the year unfolds like a well-scripted drama, rate cuts may indeed be “appropriate” at some point. How thrilling! 📉

“I continue to believe that the current setting of monetary policy is restricting economic activity somewhat and putting downward pressure on inflation.”

Ah, the sweet nectar of lower interest rates! Such cuts are often seen as a siren call for Bitcoin (BTC) and its merry band of crypto enthusiasts, enticing them to frolic in the fields of riskier assets. Who could resist such temptation? 🍷

“If this winter-time lull in progress is merely a fleeting moment, as it was last year, then further policy easing will be appropriate. But until clarity graces us with its presence, I prefer to keep the policy rate steady,” Waller mused, with a twinkle in his eye. ❄️

In a dramatic twist, the Fed decided to lower rates by a single percentage point in the final act of 2024, yet left them unchanged at their January gathering. A cliffhanger, indeed!

Waller, ever the optimist, noted that the current 12-month readings are lower than those of January 2024, suggesting some progress in the battle against inflation, though he lamented that the numbers remain “still too high.” A tragic flaw, perhaps? 🎭

Inflation, that persistent little rascal, has proven to be more stubborn than anticipated, leading markets to push back their expectations of further rate cuts this year. How very predictable! 📉

The latest whispers from the CME Group’s FedWatch Tool suggest that the odds of even a modest 0.25% cut at the next Fed meeting in March stand at a mere 2.5%. A most tantalizing prospect! 🧐

White House tariffs could cause modest price increases

Waller, with a flourish, downplayed the notion that President Trump’s trade war would ignite inflation, suggesting that tariffs would “only modestly increase prices and in a non-persistent manner.” How delightfully understated! 🎩

“Of course, I concede that the effects of tariffs could be larger than I anticipate, depending on how large they are and how they are implemented,” he added, with a wink. A true master of diplomacy! 🤝

“But we also need to remember that it is possible that other policies under discussion could have positive supply effects and put downward pressure on inflation.”

In a dramatic flourish, Trump signed an executive order on February 13, placing reciprocal tariffs on trading partners, a move that sent shockwaves through the markets. How thrillingly chaotic! 📉

Earlier, on February 1, Trump launched tariffs against Canada, Mexico, and China, sending both stock and crypto markets into a tailspin. A veritable rollercoaster ride! 🎢

Yet, the crypto market, ever resilient, rebounded after the planned tariffs on Mexico and Canada were paused for a mere 30 days. A true testament to the indomitable spirit of speculation! 💪

2025-02-18 06:56

White House tariffs could cause modest price increases

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