Fed can afford to stay patient as inflation risks ease: Steve Englander
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“Our forecast was that they would be flat in 2026... unit labour costs, which are the biggest driver of domestic price pressures, are very, very muted... With oil prices coming down... inflation risk is lower. They really do not have to do much,” he said. Markets Push Expectations Towards Year-End Market expectations for interest-rate moves have shifted modestly over recent days, but Englander believes these changes are largely technical rather than fundamental. He noted that while traders briefly considered an earlier rate move, expectations have once again shifted towards later in the year. He also said the positive tone struck by Fed Chair Kevin Warsh at the Sintra forum helped lift investor sentiment and supported U.S. equities. “The market was flirting with the idea of pushing the hike into July. Then they backed away from it, and now it looks more towards the end of the year... the equity market response... was largely in response to this positive tone and sense of inflation possibly being contained,” he said. Metals Pullback Seen as a Short-Term Correction The recent decline in gold, silver, and other metal prices should not be interpreted as a long-term trend, Englander said. He attributed the correction to investors trimming positions after an unexpected rise in real and nominal interest rates. Despite the recent weakness, he believes the broader outlook for precious metals remains favourable as supply-side pressures persist and global growth remains resilient. “The positions were cut, and we saw prices coming off. But I do not think that this is the long-term destination for metals... this is a short-term reaction, but not necessarily where metals are going in the longer term,” he said. Yen Needs Policy Action Beyond Intervention Commenting on the sharp depreciation of the Japanese yen, Englander said currency intervention alone is unlikely to produce lasting results. He argued that stronger monetary policy action would be far more effective than repeated intervention in the foreign exchange market. Until that happens, he expects the yen to remain under pressure as investors continue to favour the U.S. dollar. “The most powerful intervention would be to push rates up faster than the market is expecting... intervention by itself... may not be the ticket for a durably stronger yen,” he added. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
document fetched 2026-07-02 08:54