Quotes from UniCredit Research:
- As the Fed approaches its first rate hike, FOMC members are still debating whether the US economy is ready to cope with some policy normalization. Our findings suggest that labor market dynamics and capacity utilization are currently even stronger than they were during these two previous rate-hike episodes.
- Inflation dynamics are a bit lower, but the outlook for a re-acceleration remains intact. Wage gains have started to gather some momentum, and unit labor costs are already rising faster than in 1994 and 2004.
- Adding to this, the fact that the short-term interest rate is currently 100bp and 300bp lower than it was in mid-2004 and early 1994 makes the Fed's cautious stance even more remarkable.
