It suggests the Fed is going to be watching closely to see if it is time to start taking back rate cuts. I don't think he is saying that is imminent, but his tone is that it might be sooner rather than later.
More Quotes from Gary Thayer:
The Fed will overlook the strength in the economy before Katrina and focus more on getting the economy back on its feet and probably will hold policy steady until we see how the economy is actually dealing with the shock of lost jobs and high gasoline prices resulting from Katrina.Gary Thayer
So core inflation is still rising slightly but doesn't appear to be a problem, and I think this is good news for the Federal Reserve . With energy prices declining it reduces the risk that fuel costs will be passed on to consumers.
Gary Thayer
The bond market took the GDP number positively, ... It had expected stronger growth and some people may now be reminded that the Fed will not be quick to raise rates.
Gary Thayer
We got good news on inflation. People anticipate that with inflation still very low, the Fed will stay on hold for awhile.
Gary Thayer
We still have a very weak world economy, despite the fact that the U.S. economy is still doing pretty good, ... We're seeing lower prices basically because there is more production out there than demand.
Gary Thayer
Inflation is creeping up, but it's not out of hand. I think that's pretty important, ... The bond market may have discounted a worst-case scenario over the last couple of months on inflation, and now maybe traders won't have to worry about the Fed moving too fast.
Gary Thayer
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