Monetary Policy

The Consumer Price Index (CPI) offered a glint of positive news and the markets rejoiced. The Annual increase in the Core CPI dipped from 3.3% to 3.2% which was enough to alleviate the building concern the FOMC might actually increase the Funds rate in 2025, rather than lower it as noted last...

On January 10 the Labor Department reported that 256,000 jobs were created in December and the Unemployment Rate ticked down to 4.1% from 4.2% in November. Wage growth eased from 4.0% to 3.9%. Overall the December report was solid, but not without a statistical blemish. The Seasonal adjustment...

The 59 th Super Bowl will be played on February 9 and the build up to the game will be outrageous. According to NBC roughly 62.5 million around the world watched the last Super Bowl. For many viewers of the Super Bowl the hype is more often greater than the actual game. In fact, of the prior 58...

During Chair Powell’s December 18 press conference, Powell used the word uncertainty 10 times as he discussed the outlook for the labor market, inflation, the level of the neutral rate, and how President Trump’s agenda could impact monetary policy.

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I thought the FOMC would lower the Funds rate by 0.25% at the December 18 meeting and might indicate less than 3 cuts in 2025. “Despite the inflation data the FOMC will lower the Funds rate by 0.25% at the December 18 meeting, after what will likely be a spirited debate. I think the Hawks and...

Last week the Treasury market was buffeted by two unfriendly inflation reports and news that the Federal budget deficit soared in November. Based on the Headlines for each report, inflation appeared to be worse than sticky. The prospect of an endless supply of Treasury debt weighed on Treasury...

After the FOMC meeting on November 7 Chair Powell began the press conference with an opening statement that presented a review of the progress monetary policy had achieved in the last two years. “ The Fed has been assigned two goals for monetary...

There were many issues that led more Democrats to vote for President Trump in the 2024 election, but inflation and the economy were the top 2. Numerous polls prior to the election showed 65% of voters rated the economy as poor or not so good. On the issue of the economy voters favored President...

For Republicans, Wall Street, and Bitcoin, Christmas came on November 5. “ The election was settled a fortnight ago, while visions of sugar plums dance in our heads .” The assumption that President Trump’s policies will only have a positive impact on economic growth is naïve.

Over the...

A long time ago a mentor asked me to make 3 words from the word assume. After a few minutes I came up with ass-u-me. In the wake of the election many people are making assumptions about what will happen in the next Trump administration. It’s likely that much of the assumptions will, with the...

I thought the election would be close and that it might take 2 or 3 days before the outcome would be known. The election wasn’t close which saved the country more angst no matter who won. In the wake of the Republican landslide, the Democratic Party must muster the courage for self reflection...

Job growth plunged in October with just 12,000 jobs being created, although the full impact of the hurricanes can’t be known with certainty. Job growth was depressed in October due to the hurricanes but the revisions to August and September weren’t weather related. August was revised down by 81...

According to data from the World Bank, the average annual increase in global GDP since 2010 has been around 2.7%, including large fluctuations depending on the year. During that same period GDP growth in China averaged 6.8%. After China joined the World Trade...

After the FOMC lowered the Funds rate by 0.50% at the September 18 meeting Wall Street quickly jumped on the 0.50% bandwagon and expected the FOMC would deliver another large cut at the meeting on November 6 or at the December 18 meeting. There were a number of reasons why this was unlikely....

Wall Street was expecting an increase of 150,000 jobs for September but was surprised when the actual number came in at 254,000. Other aspects of the report were positive as the Unemployment Rate dipped from 4.2% to 4.1% and, for the first time this year, the previous two months were revised up...

In coming months the pace and size of rate cuts will be totaling dependent on future economic data. In his post FOMC press conference Chair Powell made this point clearly. “In considering additional adjustments to the target range for the federal funds rate, the...

Although I was surprised that the FOMC lowered the Funds rate by 0.50% at the September 18 meeting, I didn’t think another 0.50% cut would happen at the November 7 or December 18 meetings as noted in the September 23 WTR. “ The FOMC voted to lower the Funds rate by 0.50% at the September...

In 1973 Miller Brewing ran its first “ Tastes Great! Less Filling !” commercial, which over time highlighted various sports luminaries and were fun to watch. At the September 18 meeting the FOMC provided their version. The FOMC...

William Dudley served as president of the New York Federal Reserve from January 27, 2009 until June 17, 2018. The president of the New York Fed gets to vote at every FOMC meeting while the other 11 district presidents rotate with 4 voting for one year. As such the New York Fed President is...

In July the labor market softened notably with job growth falling to 114,000 from 179,000 and the Unemployment Rate jumping from 4.1% to 4.3%. My guess was that the labor market would show some improvement in August as noted last week. “ I think the larger risk is that the Unemployment Rate...