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: Fed fund held at 3.50-3.75%, bank reserves rate at 3.65%, discount rate at 3.75%. Fed fund rate is around the neutral rate (unknown). Risks to Fed's dual mandate (prices & labor) are nearly in balance, so a rate pause this time. Long-tern rates are affected by many other factors. AI is boosting capex & productivity but its effect on labor isn't clear.
US K-economy is solid. Consumer spending is up, but survey-based sentiments aren't good. Quarterly GDP growth may be +4.xx% or +5.yy%, but it's important to look at 12-month GDP changes.
Inflation is above target & sticky at PCE index +2.9%, core +3.0%. There is inflation in goods, some due to one-time effects of tariffs passing through, but services are showing disinflation.
Labor market is stable. It's not growing, but demand is lower too. Labor-force is declining. Unemployment rate of 4.4% is hiding undercurrents.
Housing is weak. Fed is keeping an eye on rallying gold & silver prices, but those aren't Fed's issues.
Global risks are transmitted to US through oil prices & trade & there haven't been noticeable impacts so far.
Fed is both backward-looking (data dependent models) & forward-looking (SEPs, etc), so some external criticisms aren't justified. However, unexpected things do happen - pandemic, trade war, tech revolutions, etc.
Powell had lots of no-comments regarding Fed issues, his personal plans, dollar (that's for Treasury), etc. He did say that independent Fed is a feature of developed economies & that the separation of monetary policy & politics is desirable. https://ybbpersonalfinance.proboards.com/post/2404/thread
Comments
Rates: Fed fund held at 3.50-3.75%, bank reserves rate at 3.65%, discount rate at 3.75%. Fed fund rate is around the neutral rate (unknown). Risks to Fed's dual mandate (prices & labor) are nearly in balance, so a rate pause this time. Long-tern rates are affected by many other factors. AI is boosting capex & productivity but its effect on labor isn't clear.
US K-economy is solid. Consumer spending is up, but survey-based sentiments aren't good. Quarterly GDP growth may be +4.xx% or +5.yy%, but it's important to look at 12-month GDP changes.
Inflation is above target & sticky at PCE index +2.9%, core +3.0%. There is inflation in goods, some due to one-time effects of tariffs passing through, but services are showing disinflation.
Labor market is stable. It's not growing, but demand is lower too. Labor-force is declining. Unemployment rate of 4.4% is hiding undercurrents.
Housing is weak. Fed is keeping an eye on rallying gold & silver prices, but those aren't Fed's issues.
Global risks are transmitted to US through oil prices & trade & there haven't been noticeable impacts so far.
Fed is both backward-looking (data dependent models) & forward-looking (SEPs, etc), so some external criticisms aren't justified. However, unexpected things do happen - pandemic, trade war, tech revolutions, etc.
Powell had lots of no-comments regarding Fed issues, his personal plans, dollar (that's for Treasury), etc. He did say that independent Fed is a feature of developed economies & that the separation of monetary policy & politics is desirable.
https://ybbpersonalfinance.proboards.com/post/2404/thread