The positions of Federal Reserve officials are gradually being divided. Some see the need for a less aggressive policy, while others are betting on maintaining the same position and further raising rates according to the plan.
At the subsequent meeting of the central bank, according to Federal Reserve Bank of Dallas President Lorie Logan, it would be prudent to further slow down the rate of the interest rate increase. We're referring to the meeting that will take place in February of this year. At the University of Texas at Austin, McCombs School of Business, Logan remarked, "A slower pace is merely a means to make sure we're making the best possible selections." Even if GDP slows, "we may, and if necessary, should change our overall policy to maintain restrictive financial conditions."
In her first address on monetary policy since taking office in August last year, Logan stated that she agreed with the Fed's choice to slow the rate of an interest rate increase to half a percentage point at the December meeting. It's important to note that she mentioned boosting the rate by 0.5%, not by 0.25%, as many people would anticipate. Thus, her speech about lowering aggression somewhat deviates from expectations and positions her on the side of those who favor the Federal Reserve System continuing its strict monetary policy.
She claims that Logan, who is a voting member of the Federal Open Market Committee this year, may hike rates even higher if required in the future. "We must keep an eye on the financial and economic outlook and devise a flexible yet solid plan of action. This will put us in a better position to succeed, regardless of how the situation develops "added Logan.
Permit me to remind you that the report from last week showed that inflation continued to fall in December, which raised concerns about the need to lessen price pressure and anticipation that the Fed would further slacken its rate hike schedule. The Federal Reserve raised interest rates by 0.5% in December, increasing the federal funds rate to 4.5% after four straight rises of 75 basis points. Investors are currently predicting a quarter-point hike in the following meeting.
Logan stated, "I view increasing inflation in the service sector as an indication of an overheated economy and a tight labor market, which need to be brought into a more balanced state so that the overall inflation rate returns to 2%." She also stated that the Fed is managing two threats well despite describing the labor market as "tight." She believes that to achieve price stability, the labor market and economy will need to be somewhat weaker.
Given that the bullish trend has not yet been broken, the technical picture of EUR/USD indicates that demand for the euro could resume at any time. There is also a prospect for more expansion and setting new records for the year. To do this, the trading instrument must remain above 1.0770, which will cause it to increase to the vicinity of 1.0815. You may reach 1.0860 with ease by climbing over this point. If the trading instrument falls, only a breakdown of support at 1.0770 will put more pressure on the pair, pushing EUR/USD to 1.0720 with a possible drop to a minimum of 1.0685.
Regarding the technical analysis of GBP/USD, the pound's efforts to keep rising have been fairly successful so far. Buyers must continue to trade over 1.2310 to keep their advantage. The only thing that will increase the likelihood of a further recovery to the area of 1.2430, after which it will be possible to discuss a more abrupt move of the pound up to the area of 1.2485, is if the resistance of 1.2370 fails to hold. After the bears seize control of 1.2310, it is feasible to discuss the pressure on the trading instrument. The GBP/USD will be forced back to 1.2250 and 1.2190 as a result, hitting the bulls' positions.