Fed’s Barr says policy needs recalibration, more adjustments likely

Federal Reserve Governor Michael Barr said on Tuesday that “there is a need to recalibrate policy,” and that the base case is that “further policy adjustments” are likely needed.

In his speech, Barr added that he expects GDP to pick up from 2% in the first half, and stated that the labour market is solid, “supported by business investment and consumer spending.”

Money markets had priced in a nearly 66% chance of a rate hike by the Federal Reserve at the October meeting, according to Prime Terminal. For the December meeting, the odds for a rate increase are at 94%.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Federal Reserve interest rate probability - Source: Prime Terminal

Key highlights:

He expects GDP growth to 'pick up a bit' in second half of year, from 2% pace in first half

Risks to achieving inflation target have increased, risks to labor market have receded

There is a need to recalibrate policy; base case is that further policy adjustments likely to be needed

Labor market solid, supported by business investment and consumer spending

Inflation is a key concern; fed has been 'knocked off course' to 2% goal

Does not see a clear trend toward a timely return to 2% inflation

Makes sense to pencil in AI productivity boost in medium term, but difficult to project how or when

Says he is optimistic AI will boost productivity in the longer term

Too early to know if AI will push up neutral rate of interest

AI buildout likely to be a strong boost to us economic activity in next year or so

Should be prepared for serious short-term disruptions in labor market from AI

Broad productivity gains from AI may take some time

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.46%	0.36%	0.06%	0.17%	0.74%	0.70%	0.43%
EUR	-0.46%		-0.10%	-0.41%	-0.31%	0.27%	0.25%	-0.04%
GBP	-0.36%	0.10%		-0.31%	-0.18%	0.36%	0.34%	0.06%
JPY	-0.06%	0.41%	0.31%		0.13%	0.68%	0.64%	0.37%
CAD	-0.17%	0.31%	0.18%	-0.13%		0.55%	0.52%	0.25%
AUD	-0.74%	-0.27%	-0.36%	-0.68%	-0.55%		-0.03%	-0.31%
NZD	-0.70%	-0.25%	-0.34%	-0.64%	-0.52%	0.03%		-0.26%
CHF	-0.43%	0.04%	-0.06%	-0.37%	-0.25%	0.31%	0.26%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).