Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Rates were maintained - fed funds 5.25-5.50%, bank reserves rate 5.4%, discount rate 5.5%. Treasury QT continues at the reduced level of -$25 billion/mo, but MBS QT remain at -$35 billion/mo.
Inflation target remains +2% average. The confidence in progress on inflation is higher. All aspects are showing improvements - goods, services, headline & core PCE. There is also balanced progress on the dual mandate - inflation & jobs. The current monetary policy is restrictive & its effects are showing up with expected lag, especially in housing.
Economy is growing moderately. Capex is rising. Recessions isn't in the cards for the near future. The pandemic & its aftermath has upended lot of conventional wisdom & rules.
Labor market remains strong. Wage growth is OK. Surveys seem worse that what the aggregate data are showing.
There were specific discussions about rate cuts. There was no consensus for July (this meeting) cut. But September cut would depend on additional data. There are risks in cutting too early vs waiting too long. There may be multiple cuts as there is room with the fed funds at the current level, but larger 50 bps or higher cuts are unlikely.
The Fed is keeping track of the developments on CBDC but there are no plans for digital-dollar. As the Fed is a payment processor itself, it is watching the instant payment aspects of digital currency. https://ybbpersonalfinance.proboards.com/post/1580/thread
Below are my highlights which did not make me think we need to have a runaway stock market but cap weighted indices begged to differ. I guess the reaction between AI and micro caps is telling.
Statement: "The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate." [This changed from attention to inflation to attention back to the dual mandate.]
Presser: "But September cut would depend on additional data. There are risks in cutting too early vs waiting too long. There may be multiple cuts as there is room with the fed funds at the current level."
We may have seen this show before. The Fed was very slow to begin raising rates....it wanted to have the data very clearly lead the way. But it then raised rates aggressively once they started to move. It's to early to know. But, the data may now be pointing the way towards some aggressive rate cutting in the relatively near future. Of course, the outcome of the upcoming elections will likely impact how far and how long any sequence of cuts continues once it begins.
Markets are throwing a tantrum. When do the FOMC members’ speaking engagements start?
Austin Goolsby was on Bloomberg at noon. It helped for a while.
Thanks. I did catch him in my Bloomy recording. Rate cuts are coming irrespective of the state of the economy. More speeches will come next week.
He was measured because he did not want to get into trouble. Not sure what he could have said other than the obvious but sometimes that is all people need to hear (re-assurance).
I would not mind a prolonged flush of the equity markets, except that the collateral effects of that would result in a social malaise which we can not afford - we already have enough of it. The quick flushes are of no use.
Comments
Rates were maintained - fed funds 5.25-5.50%, bank reserves rate 5.4%, discount rate 5.5%. Treasury QT continues at the reduced level of -$25 billion/mo, but MBS QT remain at -$35 billion/mo.
Inflation target remains +2% average. The confidence in progress on inflation is higher. All aspects are showing improvements - goods, services, headline & core PCE. There is also balanced progress on the dual mandate - inflation & jobs. The current monetary policy is restrictive & its effects are showing up with expected lag, especially in housing.
Economy is growing moderately. Capex is rising. Recessions isn't in the cards for the near future. The pandemic & its aftermath has upended lot of conventional wisdom & rules.
Labor market remains strong. Wage growth is OK. Surveys seem worse that what the aggregate data are showing.
There were specific discussions about rate cuts. There was no consensus for July (this meeting) cut. But September cut would depend on additional data. There are risks in cutting too early vs waiting too long. There may be multiple cuts as there is room with the fed funds at the current level, but larger 50 bps or higher cuts are unlikely.
The Fed is keeping track of the developments on CBDC but there are no plans for digital-dollar. As the Fed is a payment processor itself, it is watching the instant payment aspects of digital currency.
https://ybbpersonalfinance.proboards.com/post/1580/thread
Below are my highlights which did not make me think we need to have a runaway stock market but cap weighted indices begged to differ. I guess the reaction between AI and micro caps is telling.
Statement: "The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate." [This changed from attention to inflation to attention back to the dual mandate.]
Presser: "But September cut would depend on additional data. There are risks in cutting too early vs waiting too long. There may be multiple cuts as there is room with the fed funds at the current level."
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
He was measured because he did not want to get into trouble. Not sure what he could have said other than the obvious but sometimes that is all people need to hear (re-assurance).
I would not mind a prolonged flush of the equity markets, except that the collateral effects of that would result in a social malaise which we can not afford - we already have enough of it. The quick flushes are of no use.