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  • edited March 2022
    Press conference upcoming. May move markets.

    After the FOMC announcement equities did a U-turn. Dow fell about 200-300 points over a few minutes to about flat at present. Had been strong earlier in day. Gold ticked up $5, but is still off $15 for the day at near $1900. P/M iminers are off 2% as of 2:30.

    If I heard right, the fed is predicting a return to their target 2% inflation within the next few years.
    (But didn’t offer to sell anyone a bridge).
  • edited March 2022
    Notes after press conference 

    Low probability of recession this or next year. Inflation should start to come down in 2022/H2 - some delay is due to the Russia-Ukraine war; supply-chain issues should lessen, base-effwcts should be past. Rate hikes may be 25 bps at every FOMC meeting in 2022 & 50 bps hike is not ruled out - this will depend on data. The balance sheet reduction will cause further tightening. Talk-effect has led to some tightening already. Negative rates for a while still would mean easy monetary policy.
  • edited March 2022
    From Washing Post this morning,
    signaled far more rate hikes, a total of seven for this year, marking a big first step in the Fed’s precarious fight to rein in the highest inflation in 40 years.
    If 25 bps per hike, 7x0.25 = 1.75% by year end. Fed missed the boat completely to combat inflation last year. The “transitory” term should be long gone.
  • @Sven - so you don't think that Covid and all of it's ramifications along with supply chain issues had, and continue to have, anything to do with inflation? I just think that it would have been hard to raise rates when folks were already suffering. I admit that I don't have any idea how it all fits together.
  • @Mark, On the contrary I believe COVID has significant ramifications on the economy including work stoppage, labor shortage, supply chain challenges and let alone the human toll across the globe. Just as COVID situation stabilized somewhat, the Ukraine war started…

    I just quoted the FOMC minutes. I think the pace and the number of rate hikes this year could push the economy into a recession and that would be bad for everyone. Like you I am not sure what can be done with high inflation given the circumstances we are in.
  • @Sven, I guess I was specifically referring to your statement "Fed missed the boat completely to combat inflation last year." and what could have or should have been done then. It seems like it's a tough balancing act and I'm glad that it's not my job.
  • @Mark- I feel exactly the same way on that.
  • Keep in mind that Powell is not confirmed yet. First, the announcement of his reappointment was delayed to only few weeks before his term expiry (early-February 2022). Now it is stuck in the Senate on a deadlock that was eliminated just yesterday. For now he is Fed Chair-Pro-Tempore.
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