Feds Jefferson:We need to move carefully to balance risk of tightening too much/too little

<p>Fed vice chair Jefferson (voting member) speaking and says:</p><ul><li>We need to move carefully to balance the risks of tightening too much or too little</li><li>May be too soon to say confidently we have tightened enough.</li><li>Mindful of lag effects of past rates as I consider whether we will need further policy tightening.</li><li>Rising long-term yields in the past may have meant investors seek stronger economic momentum and need for higher for longer Fed rate path</li><li>Mindful that changes in real yields can arise from changes investors view of risk, uncertainty.</li><li>Will keep higher bond yields in mind in assessing future rate path.</li><li>Recent inflation data encouraging, but inflation still too high.</li><li>Core PCE prices will moderate further as labor market comes into better balance.</li><li>Labor market remains tight, but labor demand is falling. Supply is improving.</li><li>There is a path to restoring price stability without a large gain in unemployment.</li><li>Expect further gradual easing of labor market conditions.</li><li>I am particularly attentive to upside inflation risks from a strong economy, labor market, energy prices.</li><li>Downside risks to economic activity include slowdown in China, and Europe</li></ul><p>As far as rate hike probabilities:</p><ul><li>There was a 30% chance of a hike on Friday for the next meeting in November. That is now down to 14%.</li><li>There was a 45% chance of a hike on Friday in December. That is now down to 27%.</li></ul>

This article was written by Greg Michalowski at www.forexlive.com.