• We have a pretty significant inflation problem
• The job market is stable
• I’m most attuned to the inflation side of the dual mandate

Fed’s Goolsbee isn’t a voter this year and he’s been leaning on the hawkish side for quite a while, so his remarks are not surprising at all. The most important thing is that the Fed is likely to abandon the easing bias in June if we don’t get a resolution on the US-Iran front by then.

We might even be in for a hawkish surprise given the elevated inflation and resilient US data. As a reminder, Powell decided to stay on the board until 2028 and Miran has finally left. Trump will be having only Warsh at the Fed. Bear in mind that monetary policy is decided on a majority basis, so the focus will now be on the FOMC and not the Fed Chair.

Tomorrow is when we could get the first taste of a hawkish Fed pivot as Fed’s Waller is scheduled to speak at the Centre for Central Banking in Frankfurt, Germany on the Economic Outlook. The economic outlook speeches generally contain policy signals.

Fed’s Waller has been a great “leading indicator” for Fed policy in this cycle and I think the market would react in a big way if he were to change his dovish stance now. He’s been worrying about the labour market but the data has been pointing to resilient conditions. What is more in tension now is inflation and if he switches his focus back to that, it might be taken as a signal for potential rate hikes.

Mark on your calendars Fed’s Waller speech tomorrow at 14:00 GMT/10:00 ET.