Fedwatch

@Fullcarry Is bar for hike not high given Williams has on two occasions said rates are “well positioned” and expects prices to come down in the coming months?

Whether the Fed hikes rates in July will resolve next week after June CPI prints. Hike odds pulled back after tepid job gains and inline FOMC minutes and are now hovering around 20%

@dampedspring How did he take July off the table?

Thanks for taking July hike off the table Kevin. No forward guidance period over?

@Fullcarry Was it not priced in I assumed the consensus was she would be fine

USTs unaffected by Cook decision.

@LNG_Investor_ Was surprised he even had 1 cut this year at the start always assumed to be a big hawk

Kashkari Says Fed May Need Rate Hike Amid Broad Inflation

@BlacklionCTA Where are you seeing this?

Good to see Mr. Kashkari on the mic honoring the Chair's desire to do away with forward guidance.

@NickTimiraos Does current stance of policy mean the current fed fund rate or the new hawkish shift since June meeting? Or am I overthinking?

NY Fed President John Williams: Inflation is "unquestionably elevated and well above" target, reflecting tariffs, energy, and AI-related demand for tech goods. "In coming quarters, however, I expect inflation readings to edge down" for several reasons: First, tariff effects "appear to have mostly played out." Second, a base case is that Hormuz related supply disruptions "are resolved relatively soon." Third, housing inflation should continue to slow. Fourth, there's no evidence of labor-market driven price pressures. The punchline: "Given the elevated level of inflation, it is imperative that we restore it to our 2% longer-run goal on a sustained basis. The current stance of monetary policy is well positioned to do that." tellerwindow.newyorkfed.org/2026/06/25/the…

@Claudia_Sahm How common has this been? Has it been happening since the beginning of the fed or is a new phenomenon?

I don’t blame private companies from trying for an info advantage and it wasn’t a good match for me … but it’s frustrating that the Fed doesn’t shut down private interactions. If nothing else, press should be present.

Once I got dropped from a job interview because I said, no, when asked if I could get current Fed officials for private events. I noted it’s not ethical, no one could …. ha

@NickTimiraos Higher rate as in next the FOMC meeting or higher when it moves rates?

Out: Forward guidance In: Task forces The new Fed chairman put his stamp on the *process* of the Fed, but the market cares about what the Fed will do. With little guidance from the chair, his broad commitment to deliver price stability and the committee's rate projections teeing up a rate hike later this year led markets to dial up bets on a July rate rise wsj.com/economy/centra…

@fmr_syfurr_punk @NickTimiraos Fair but even doves like Paulson has been shifting hawish

@NickTimiraos my guess is four (the three voting dissenters plus Collins)

Fed minutes: “A majority of participants highlighted…that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2%." "Many" indicated a preference for ditching the easing bias.

@NickTimiraos @vtg2 2019 is great example and your book details it very well.

Sharp column. It gets at something I’ve struggled to articulate, that Powell’s whole decision-making approach could perhaps be summarized around recognizing he could be wrong and trying to make sure any mistakes were ones he could fix. Risk management = regret management: If you’re going to be wrong here (and you’ll of course never know the counterfactual), which mistake is easier to fix or live with? After the early 2019 pivot, when someone challenged him for quickly jettisoning his earlier view, he said something along the lines: We aren’t trying to win an argument; we’re trying to set the right policy.

Next month, I will have been covering the Federal Reserve for 10 years. In my latest column, I reflect a bit on an underrated lesson from Jay Powell’s tenure politico.com/news/magazine/…

@NickTimiraos Does it counts as a resignation of chair? Asking for a friend hehe.

Because Powell's term as Fed chair ends in a few hours and it isn't clear when Warsh will be sworn in as chair (that decision is subject to some paperwork, including the president signing Warsh's official commission and also any necessary completion of divestiture of assetholdings), the Fed's board went ahead and named Powell as the chair pro tempore (interim leader) until Warsh is officially sworn in.

@sama @grok any usage limits

codex is the best AI coding product and we want to make it easy to try. for the next 30 days, we are giving companies that want to try switching over two months of free codex usage.

@NickTimiraos Amazing example

For a thorough answer to this question, I would highly recommend reading Bernanke's 2004 speech on this subject. Especially this part: "The public's expectation that inflation will remain low minimizes the second-round effects of oil price increases, which (in a virtuous circle) helps to limit the ultimate effect on inflation. Moreover, well-anchored inflation expectations have been shown to enhance the stability of output and employment. Maintaining the public's confidence in its policies should thus be among the central bank's highest priorities. For this reason, I would argue that the Fed's response to the inflationary effects of an increase in oil prices should depend to some extent on the economy's starting point. If inflation has recently been on the low side of the desirable range, and the available evidence suggests that inflation expectations are likewise low and firmly anchored, then less urgency is required in responding to the inflation threat posed by higher oil prices. In this case, monetary policy need not tighten and could conceivably ease in the wake of an oil-price shock. However, if inflation has been near the high end of the acceptable range, and policymakers perceive a significant risk that inflation and inflation expectations may rise further, then stronger action, in the form of a tighter monetary policy, may well prove necessary. In directing its policy toward stabilizing the public's inflation expectations, the Fed would be making an important investment in future economic stability."

@EconguyRosie Is there a reason to believe the revised numbers will skew on the downside? I have always thought it’s a wash in the end ie it could be a revised up/down?

It isn’t just that nonfarm payrolls unexpectedly declined -92k in February, which still would have come in at nearly -50k without the effects of the inclement weather and striking health care service workers. It’s the constant negative downward revisions. In fact, every single month back to January 2025 has been revised lower from the initial estimate, and by a cumulative 1.1 million! With that in mind, imagine just how bad today’s number is going to end up proving to be. Whether it be the Payroll or Household survey, there has been no job growth this past year. And this is what the Fed describes as “stabilization” in the labor market.

@TheStalwart This might be dumb but does the model give weight to the speakers ie the chairs speech is given mode weight?

Anyway. Would love it if AI and econ people checked it out and gave me feedback. It's just an experiment, but I think the methodology is promising. Read my full writeup here in the newsletter. bloomberg.com/news/newslette…

PRESENTING: FEDLOCK In today's newsletter, I write about my latest vibecoding foray, wherein I attempt use LLMs -- specifically via the "LLM-as-Judge" approach -- to measuring the hawkishness of central bank communication over time. Try it here: jnathan9.github.io/fedlock/

@Noahpinion If you were against military action would you not recommend the most extreme option to make it binary of no strike or go all in?

Interesting.

@grok @IrvingSwisher @TheStalwart @stlouisfed please add an online option 😭

@Fedwatchenjoyer @IrvingSwisher @TheStalwart The FRED hoodie (and other swag like shirts) is sold in-person at the gift shop in the Economy Museum at the St. Louis Fed. No online option right now. Visit details: museum.stlouisfed.org/plan-your-visit

The FRED Hoodie is the real flex

@NickTimiraos Very hawish given his base case of supporting a cut for Jan.

Waller doesn't engage with the concerns around inflation that have and—given firm PCE readings for Dec-Jan—may well continue to animate hawkish resistance from his colleagues. In his view, "underlying inflation is running close to 2%" once you net out tariff effects.

Fed governor Chris Waller conditions his support for a March cut (or hold) on the February payroll data due for release on March 6. “As things stand today, I rate these two possible outcomes as close to a coin flip.” federalreserve.gov/newsevents/spe… If the data validates the apparent upturn in the January payroll report, it would be appropriate to pause. “I can’t dismiss the possibility that the labor market data has pivoted to a more solid footing.” But he lays out reasons to suspect that the January report—the narrow breadth, the prospect for revisions, other surveys that weren’t favorable—was a head fake that would maintain a case for cutting in March. “There are enough asterisks around the January data that I will need to see the February report ... before forming any judgment on whether there has been a rebound.”

@NickTimiraos @thejefflutz @grok why does it make it more notable?

@thejefflutz The revisions were negative, as expected, which in some ways makes the strength in the initial print for January 2026 more notable.

The January jobs report cements the Fed's extended pause on interest rates. Powell on Jan. 28: "The economy has, once again, surprised us with its strength—not for the first time." Attention now shifts to the turn-of-the-year price resets in the CPI wsj.com/economy/jobs/j…