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Rates were maintained - fed funds 5.25-5.50%, bank reserves rate 5.4%, discount rate 5.5%. Rates may be higher for longer; need more confidence in progress towards inflation goal. No specifics provided for June cut. Current policy is restrictive. Financial conditions are tight.
QT continues at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS; total -$95 billion/mo. Cumulative balance sheet reduction -$1.5 trillion. There was some talk of slowing down QT & being monitored are money-markets, bank reserves and liquidity.
Inflation is still too high; there are some sticky areas. Target is +2% average "over time" (mentioned several times).
Labor market remains tight, wages are going up at a slower pace, unemployment rate is near target. Economy is in good shape also.
Housing contribution to CPI, PCE, etc is via OERs (owners' equivalent rent) & that should be lower in due course.
Fed is studying & keeping up with the developments on digital currencies, CBDC, fin tech, but isn't working on a launch of digital-dollar unless Congress approves first.
While JP was making a distinction about QT for MBS vs Treasuries and discussing in some detail about MBS QT, I was distracted with something else. Do you mind repeating what he said? Thanks.
JP's comments about CBDC is music to crypto native's ears. Crypto industry is regaining the spring in its step after SBF fall and has been very active in 2024 elections.
There were several questions related to QT reduction. Powell didn't say how much reduction or what he meant by soon. He did say that eventually, the Fed holdings will be only the Treasuries, as it used to be historically. Uneven impact of QT was also noted.
He made a joke about the Fed not cooking up a digital-dollar launch in some secret lab to spring it suddenly on the public. But he indicated that it was keeping tabs on it, so there are Fed staff for digital currencies. But nothing will happen without Congressional action.
On transparency, there was a follow up on whether there were days when he wished all this transparency went away. His deliberate response was "of course (pause) not" that caused laughter.
Comments
Rates were maintained - fed funds 5.25-5.50%, bank reserves rate 5.4%, discount rate 5.5%. Rates may be higher for longer; need more confidence in progress towards inflation goal. No specifics provided for June cut. Current policy is restrictive. Financial conditions are tight.
QT continues at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS; total -$95 billion/mo. Cumulative balance sheet reduction -$1.5 trillion. There was some talk of slowing down QT & being monitored are money-markets, bank reserves and liquidity.
Inflation is still too high; there are some sticky areas. Target is +2% average "over time" (mentioned several times).
Labor market remains tight, wages are going up at a slower pace, unemployment rate is near target. Economy is in good shape also.
Housing contribution to CPI, PCE, etc is via OERs (owners' equivalent rent) & that should be lower in due course.
Fed is studying & keeping up with the developments on digital currencies, CBDC, fin tech, but isn't working on a launch of digital-dollar unless Congress approves first.
Fed transparency is good as-is.
There were new SEP data.
https://ybbpersonalfinance.proboards.com/post/1397/thread
He made a joke about the Fed not cooking up a digital-dollar launch in some secret lab to spring it suddenly on the public. But he indicated that it was keeping tabs on it, so there are Fed staff for digital currencies. But nothing will happen without Congressional action.
On transparency, there was a follow up on whether there were days when he wished all this transparency went away. His deliberate response was "of course (pause) not" that caused laughter.
For everyone interested,
Three Q&A after the first 30 minutes of the press conference deal with QT.
Press Conference will be posted at the link below (it is probably already available on Youtube).
https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm