“If we need to hold rates where they are for an extended period of time to tap the brakes on the economy, or if we even needed to raise, we would do what we needed to do to get inflation back down,” Kashkari said.
Perhaps seen as a outlier and not even a voting member of the Fed’s policymaking committee this year, markets appeared to bat the comments away.
Helped by brisk demand for the hefty $58 billion sale of three-year notes on Tuesday and another sharp fall in crude oil prices, Treasury yields were relatively calm going into a $42 billion 10-year auction later on Wednesday.
Crude oil prices fell to their lowest since March 11 as industry data showed a pile-up of U.S. inventories – a sign of weakening demand – and cautious supply expectations emerged ahead of an OPEC+ policy meeting next month.
U.S. crude stocks rose by 509,000 barrels in the week ended May 3, sources said, citing American Petroleum Institute figures, and gasoline and distillate inventories also rose. Official U.S. government data is due later in the day.
And European bourses looked set for record highs as Sweden cut interest rates on Wednesday and underlined the divergence between European central banks policymaking and the Fed’s.
Sweden’s central bank cut its key interest rate to 3.75% from 4.00% as expected and said it was likely to cut the rate two more times in the second half of the year if the outlook for inflation still holds.
After eight rate hikes in Sweden, inflation is now close to the Riksbank’s 2% target after peaking at over 10%.
The Riksbank is the second of the major G10 central banks to ease, with the Swiss National Bank jumping the gun in March.
And crucially, the crown weakened only marginally.
With the European Central Bank now widely expected to cut rates next month, attention turns to Thursday’s Bank of England meeting. Although no UK move is expected this week, there’s considerable speculation the BoE may open the door for a rate cut in June too.
Britain’s benchmark FTSE 100 hit a new record high on Tuesday, 10-year gilt yields fell to their lowest in almost four weeks and the pound slipped.
The overall picture kept the dollar buoyed generally – especially against the ailing Japanese yen. Dollar/yen climbed back above 155 despite fresh warnings from Japanese authorities of repeat intervention to sell dollars.
