The economy is showing signs of slowing down at a moderate pace, but there are no signs of a significant decline. If the economy continues to weaken, it will only be by a small margin. According to the speaker, the economy needs to slow down in order to reach its long-term inflation target. While the speaker is considering making one rate cut this year, they are closely monitoring the situation and waiting for it to unfold. If the economy progresses as expected, rates may start being cut in Q4. The speaker predicts that inflation will reach its target by 2026.
Secondary measures in the inflation numbers have raised concerns about an even slower pace of growth. However, the speaker is not planning to disrupt economic dynamics as long as inflation remains on track towards its target. Employment contacts have not expressed any concerns about job losses or layoffs. The speaker’s hawkish stance has sparked discussions about a more hawkish Federal Reserve among some experts in the industry.
The secondary measures that are causing concern include an increase in the percentage of goods in the CPI basket growing above 3% and 5%. These trends are reminiscent of high inflation periods from previous decades and could indicate underlying pricing pressures that need to be addressed before any changes can be made to monetary policy rates. As such, the speaker plans to closely monitor these trends and wait for any signs before making any adjustments to their policy position.
In conclusion, while there are concerns about an even slower pace of growth in the economy due to secondary measures in inflation numbers, the speaker is not planning on taking drastic action until there is clear evidence that inflation pressures have eased up or employment conditions begin to deteriorate significantly.
