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Rates: Fed funds held at 4.25-4.50%, bank reserves rate at 4.40%, discount rate at 4.50%. Treasury QT continues at -$25 billion/mo, MBS QT at -$35 billion/mo.
Financial conditions are restrictive considering that the longer term rates have risen. Fed fund rates are well above the neutral rate (that’s known in hindsight only), so the trend for fed fund rates is flat or down.
Fed has a dual mandate for inflation & jobs. It will stick to the +2% average inflation target (trailing 12 months) as most global central banks do. It’s a bad idea to talk about changing the goals while not meeting them. The 5-yr Fed review will not include the +2% average inflation target.
There are uncertainties with any new administration. So, the Fed will be watching how the details evolve for fiscal, tariff & immigration policies.
Fed will evaluation President’s Executive Orders & the applicable laws (Dodd-Frank, etc) as they relate to DEI (diversity, equity & inclusion) & other matters. The Fed operates with its own resources & not with annual federal budget allocations. The importance of central bank independence has been proven over time.
Fed models consider a wide range of parameters & outcomes, but it waits for specific scenarios to develop before acting.
The Fed has withdrawn from the NGFS (Network for Greening the Financial System) because NGFS goals have become too broad globally, while the Fed has narrower mandate & focus.
The Fed isn’t concerned about the stock market levels or the popularity of cryptos, but it evaluates them from the perspectives of financial stability. Regulation of banks under Fed supervision is to ensure that asset risks are appropriately accounted for.
Housing OERs are coming down from high levels. Higher mortgage rates are negatively impacting housing.
Consumers will benefit from lower inflation, but that doesn’t mean lower prices & that is causing some unhappiness.
Thanks @yogibearbull for the excellent summary. Usually enjoy listening to the “Powell Show” following the statement, but missed it today. He must have performed a marvelous “balancing” act during the news conference.
Market reaction uncharacteristically subdued. Calls to mind Eliot’s ”Not with a bang but a whimper”.
Comments
into tone.Rates: Fed funds held at 4.25-4.50%, bank reserves rate at 4.40%, discount rate at 4.50%. Treasury QT continues at -$25 billion/mo, MBS QT at -$35 billion/mo.
Financial conditions are restrictive considering that the longer term rates have risen. Fed fund rates are well above the neutral rate (that’s known in hindsight only), so the trend for fed fund rates is flat or down.
Fed has a dual mandate for inflation & jobs. It will stick to the +2% average inflation target (trailing 12 months) as most global central banks do. It’s a bad idea to talk about changing the goals while not meeting them. The 5-yr Fed review will not include the +2% average inflation target.
There are uncertainties with any new administration. So, the Fed will be watching how the details evolve for fiscal, tariff & immigration policies.
Fed will evaluation President’s Executive Orders & the applicable laws (Dodd-Frank, etc) as they relate to DEI (diversity, equity & inclusion) & other matters. The Fed operates with its own resources & not with annual federal budget allocations. The importance of central bank independence has been proven over time.
Fed models consider a wide range of parameters & outcomes, but it waits for specific scenarios to develop before acting.
The Fed has withdrawn from the NGFS (Network for Greening the Financial System) because NGFS goals have become too broad globally, while the Fed has narrower mandate & focus.
The Fed isn’t concerned about the stock market levels or the popularity of cryptos, but it evaluates them from the perspectives of financial stability. Regulation of banks under Fed supervision is to ensure that asset risks are appropriately accounted for.
Housing OERs are coming down from high levels. Higher mortgage rates are negatively impacting housing.
Consumers will benefit from lower inflation, but that doesn’t mean lower prices & that is causing some unhappiness.
https://ybbpersonalfinance.proboards.com/post/1861/thread
Market reaction uncharacteristically subdued. Calls to mind Eliot’s ”Not with a bang but a whimper”.