Kansas City Federal Reserve President Esther George said U.S. home prices remain above their pre-pandemic trend, and it can be argued that this is partly due to quantitative easing.
She added that distributional effects benefit first-time home buyers.
US home prices remain above their pre-pandemic trend, and it can be argued that this is partly due to quantitative easing.
Distributional effects are at the expense of first-time buyers.
As we tighten policy, the dynamics of excess savings will be a key factor for the economic outlook.
Higher savings could provide a further boost to consumption
It might well take a higher interest rate for some time to convince households to hold on to savings.
Current figures suggest savings are elevated across the spectrum.
However, households with lower incomes use up their reserves faster.
Reduced inflation will mean that we will have to incentivize savings before consumption.
Wage growth remains strong.
Understanding wage growth is important for monitoring the overall development of inflation.
Employees who change jobs experience higher wage growth.
A calmer labor market with fewer people leaving could reduce inflationary pressures.
Many of my contacts report problems with low employee engagement, which hampers productivity.
US dollar update
The dollar retreated across the board on Tuesday as investors shrugged off concerns over a COVID outbreak in China and ahead of Wednesday’s Federal Open Market Committee minutes. Analysts at TD Securities see the minutes as shedding light on the FOMC’s thinking on the expected pace of rate hikes. ”Policymakers will also stress that the final rate is likely to be slightly higher than previously expected because the labor market remains too tight.”