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Fed's Williams: ‘Still have a long way’ to go on recovery

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Yahoo Finance's Brian Cheung with the latest headlines coming from the New York Fed's John Williams.

Video Transcript

ADAM SHAPIRO: There's a lot going on with the Federal Reserve. I mean, last week, we got the summary of economic projections and the infamous dot plot. But this week, we're going to hear from a whole bunch of Federal Reserve members. Let's bring in Brian Cheung. He's going to run down the calendar for us and much more. Brian.

BRIAN CHEUNG: Well, Adam, the Fed speak has already begun. We heard from three Fed presidents earlier this morning, a lot of them chiming in on that Wednesday decision last week to hold interest rates steady. But of course, it was the dot plot projections, which show where policymakers could see interest rates going in the next few years, that got markets all riled up. And you'll recall that the dot plots for 2023 showed the median member of that 18-member committee projecting two interest rate hikes by the end of 2023.

We heard from Neel Kashkari from the Minneapolis Fed, in addition to Jim Bullard last Friday. And their commentary helped us understand which of their dots were there. So Kashkari is saying he didn't see the case for an interest rate hike through the end of 2023. That explains the orange dots at the very bottom. But that Jim Bullard saying he's penciling in one interest rate hike by the end of 2022, which shows the red dot, that he doesn't see necessarily the case for keeping interest rates at near 0 through the next three years.

Now, of course, they are only two of 18 policymakers on the committee. And there are at least 10 Fed officials scheduled to speak this week. The full calendar will show you that we are expected to hear from Jerome Powell tomorrow. He'll be testifying before Congress. We'll also hear from the likes of Mary Daly. She's the head of the San Francisco Fed, who's also a voting member of the committee. And other people on dock-- Miki Bowman, who's a Fed governor, Raphael Bostic from the Atlanta Fed, Eric Rosengren from Boston, in addition to some other repeat speeches.

But we're also keeping our eye, of course, on what bond markets are doing. I was taking a look at the 30-year over the weekend. It seemed like it was flirting pretty closely to the 200 basis point level. But it does seem like bond markets have bounced back a bit since the steep losses that we saw on the bond yields in Friday's session after Bullard said that he was penciling in that 2022 hike. So a lot worth watching. But again, 10 Fed speakers on dock this week. The question, of course-- are they going offer more clarity or more confusion? We'll have to see.

JULIA LA ROCHE: And Brian, when it comes to Fed speak, we should be getting some comments crossing from New York Fed Chair John Williams. What can you tell us?

BRIAN CHEUNG: Yeah, it looks like those headlines are just crossing, Julia. John Williams, again, the head of the New York Fed, speaking at a virtual event just now. And some of the headlines from his prepared remarks note that, at least the way he's seen the economy, they still have a long way to go on the recovery. He pointed to that May jobs data, showing that the economy is still 7.6 million jobs short of pre-pandemic levels. He continued to describe inflation as mostly transitory.

This is pretty notable because a lot of the commentary from those who have argued for maybe interest rate hikes earlier, saying, well, they're a little bit more fearful of inflation being a bit more persistent. So Williams saying that inflation is mostly transitory, it could be one way of saying that he does believe that, ultimately, inflationary pressures are not as big of a deal as some that are penciling in those earlier rate hikes might see.

But an interesting quote here I guess that's worth reading-- quote, "But the data and conditions have not progressed enough for the Federal Open Market Committee to shift its monetary policy stance of strong support for the economic recovery." So nothing in his marks that really details specifically which one of his dots were his on that chart from last Wednesday. But based off reading the tea leaves, it seems like he's a bit more in the camp of trying to keep things accommodative for a bit longer.

Now, of course, these prepared remarks are coming alongside a media appearance where he might offer a little bit more clarity through a Q&A. So we'll have more updates of that right here on Yahoo Finance. But again, New York Fed president saying that he does expect inflation to be transitory, guys.

ADAM SHAPIRO: And when the Fed speaks, we listen. We also listen when Brian Cheung covers the Fed. We will see you a little bit later.