Forexlive: Fed’s Harker to Speak Again on Thursday, June 1st, Following Dovish Comments on Wednesday

Forexlive: Fed’s Harker to Speak Again on Thursday, June 1st, Following Dovish Comments on Wednesday

On Wednesday, May 31st, the Federal Reserve Bank of Philadelphia President, Patrick Harker, made some dovish comments regarding the possibility of a June interest rate hike. Harker stated that he would need to see more evidence of inflation before supporting a rate hike, and that he was not convinced that recent weak economic data was solely due to temporary factors.

These comments caused a stir in the markets, with many investors now questioning whether the Fed will indeed raise rates at their upcoming meeting on June 13th-14th. However, Harker is set to speak again on Thursday, June 1st, and his comments could provide further insight into the Fed’s thinking.

Harker is not a voting member of the Federal Open Market Committee (FOMC) this year, but his views are still closely watched by investors as he is seen as a centrist on the committee. His comments on Wednesday were seen as more dovish than expected, and caused a drop in the US dollar and a rise in US Treasury prices.

The Fed has been signaling for some time that they plan to raise interest rates gradually this year, with most analysts expecting at least two more hikes in 2017. However, recent weak economic data has cast doubt on whether the Fed will be able to follow through with their plans.

Inflation has been stubbornly low, with the Fed’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) index, falling to 1.5% in April from 1.8% in February. This is below the Fed’s target of 2%, and has led some analysts to question whether the Fed should be raising rates at all.

Harker’s comments on Wednesday suggest that he is also concerned about inflation, and that he would like to see more evidence of price pressures before supporting a rate hike. This is in contrast to some of his colleagues on the FOMC, who have been more hawkish and have argued that the recent weakness in economic data is transitory.

Investors will be closely watching Harker’s comments on Thursday to see if he provides any further insight into the Fed’s thinking. If he continues to express caution about raising rates, it could lead to further weakness in the US dollar and a rally in US Treasury prices.

However, if Harker strikes a more hawkish tone and suggests that he is still open to a June rate hike, it could lead to a rebound in the US dollar and a sell-off in US Treasuries.

Overall, the markets are currently pricing in a 78% chance of a June rate hike, according to the CME Group’s FedWatch tool. However, this could change depending on the tone of Harker’s comments on Thursday, as well as any other economic data that is released between now and the Fed’s meeting in mid-June.

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• Source: Plato Data Intelligence.