In coming months if inflation falls, labor market stays stable, no further rate cuts will be needed.
More worried about inflation remaining stubbornly high.
If see further material cooling in labor market, cutting rates could be appropriate.
Current policy stance may be very close to neutral, providing little restraint.
Cautiously optimistic current policy stance will get inflation down to 2%, sustain balanced labor market.
Not fully confident inflation is heading all the way back to 2%.
Economic activity has rebounded strongly.
Last year's rate cuts were insurance against labor market cooling, additional risk on inflation.
I anticipate progress on inflation this year; have already seen some tentative signs.
Labor market stabilizing, downside risks have meaningfully dissipated.
Inflation has been above 2% target for nearly 5 years.
Should provide central clearing for Fed's standing repo operations.
Real Fed funds rate now sits squarely within range of neutral rate estimates.
There is the start of the Fed laying the groundwork for holding rates. That would create a real headache for Warsh.but it will all depend on the data, starting with tomorrow's non-farm payrolls report.
At the moment, the market is sniffing out a weakening US economy and that has yields lower and the US dollar under pressure. A three-year auction just went off at 3.518%, which was fractionally below what the market was expecting.
The dollar is particularly soft today against the yen in the second day of USD/JPY selling following the election of Takaichi's party to a super-majority in the Lower House. That strong mandate has created a mini-boom in Japanese stock markets.
Beyond the US jobs report, the market will focus on Friday's CPI report as we try to get a sense of the direction of inflation. If jobs are weak but inflation is high, that will create a particular headache at the FOMC.
