Monetary Policy

On March 27 Fed Governor Chris Waller gave a speech to the Economic Club of New York entitled ‘ There’s Still No Rush’ . Governor Waller discussed how strong the labor market continues to be, the resilience of the economy, and recent disappointing inflation data as justification for waiting...

The evolution of rate cut enthusiasm in 2024 is an example of investors anticipating what will happen only to be proven wrong. The irony is that professionals on Wall Street frequently cite the Federal Funds rate futures as a basis for their outlook for monetary...

I thought that the Median projection for rate cuts in 2024 would fall from 3 to 2. It turns out I was only about half right. In the March Summary of Economic Projections (SEP), the Median estimate for the Funds rate at the end of 2024 was 4.6% and no different than the December SEP. This is why...

The Atlanta Fed’s GDP Now estimate for the first quarter GDP is for the economy to grow by 2.1%, so no sign of a real slowdown yet, and Wall Street expects earnings to be up by 15% by the first quarter of 2025. Wall Street has adjusted to the new reality that the FOMC won...

On February 21 Nvidia reported earnings and the minutes from the FOMC meeting on January 31 were published. With all the hype surrounding Nvidia’s earnings report the FOMC minutes were ignored. Nvidia’s earnings and subsequent rally (+16.4% on February 22) and impact on the S&P 500 are the...

The FOMC statement was particularly direct in summing up the mindset of the FOMC. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

During the press conference...

Heading into 2024 Wall Street and most investors are positive about the economy and the outlook for stock prices. Inflation is expected to decline as consumer spending holds up. The drop in inflation will allow the FOMC to lower the Funds rate as economic growth...

In his opening statement after the FOMC meeting on November 1 Chair Powell discussed Financial Conditions specifically. “ Financial conditions have tightened significantly in recent months, driven by higher longer-term bond yields, among other factors. Because persistent...

Consumer Price (CPI) inflation peaked in 1981 and then trended lower for 40 years, and after 1997, Core Consumer inflation held below 2.5%. In April 2021 inflation broke out of this 24 year base with the headline CPI pushing above 4.0% and the...