Boston Fed President Susan Collins said current interest rate policy is mildly restrictive and is already slowing economic growth while putting downward pressure on inflation. At the same time, she signaled openness to additional rate increases if inflation data do not cooperate. The comments reflect a Fed that is not yet satisfied with the inflation picture and is keeping tighter policy on the table.
Any signal that rate cuts are further away, or that hikes could return, puts pressure on rate-sensitive assets like long-duration bonds and growth stocks. Investors pricing in a soft landing or near-term cuts may need to reprice that bet. Cash and short-duration instruments look more attractive in this environment.
July 30: Fed Beige Book release. July 30 to July 31: Next FOMC meeting and rate decision. August 15: Next CPI inflation report (approximate).
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