Monetary Policy

As expected, the FOMC voted to end its Quantitative Tightening program on December 1, so it will no longer allow $5 billion of Treasury debt a month roll off. The FOMC did vote to continue allowing $35 billion a month of Mortgage-Backed-Securities (MBS) to roll off. The $35 billion will be...

At one time the phrase “ A watched pot never boils” meant time seems to pass more slowly when one is waiting for something to happen. The time waiting also allows expectations to grow and I remember when the event I had been waiting for finally...

The FOMC will lower the Funds rate by 0.25% when the FOMC meets on Wednesday October 29, which won’t be a surprise to anyone. Financial markets will react positively if the FOMC announces they will be ending their Quantitative Tightening program since this move represents another easing of...

After each FOMC member expresses their assessment of the economy, inflation, the labor market, and the appropriate level for the Funds rate during a FOMC meeting, Federal Reserve Chairs have attempted to build a consensus. During Ben Bernanke’s term as Chair (February 1, 2006...

Chair Powell noted that there is a real split within the FOMC. “We have 10 participants out of 19 who wrote down two or more cuts for the remainder of the year and nine who wrote down fewer than two cuts.” Based on the projections in the SEP, there is one group (9) who is more worried about...

In his Jackson Hole speech in August 2023 Chair Powell said, “ We are navigating by the stars under cloudy skies ". During Chair Powell’s press conference after the September 17 FOMC meeting he said, “ Right now is a particularly challenging time, even more uncertain than usual.” As Chair...

FOMC members will discuss at length the labor market and attempt to access its strength and whether recent reports elevate downside risks to job growth and higher unemployment. They will have a lot to discuss since most the of the recent data have shown softening of demand and hiring. The Ratio...

In his Jackson Hole speech Chair Powell noted the unusual nature of the current balance in the labor market and his concern that the balance could unwind quickly. “ Overall, while the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in...

Federal Reserve Governors vote at every FOMC meeting as does the President of the New York Federal Reserve. Being a Governor carries more weight in affecting policy changes than being one of the other 11 Federal Reserve district presidents. Four of the 11 district...

In his Jackson Hole speech Chair Powell presented his views on the outlook for tariff inflation, the labor market, and the conflicting signals coming from the data. “The labor market is a case in point. The July employment report released earlier this month showed that payroll job growth slowed...

On August 22 Chair Powell will speak at the Kansas City Federal Reserve’s annual symposium in Jackson Hole Wyoming. The title of this year’s get together of central bankers from around the world, government officials, and academics is " Labor Markets in Transition: Demographics,...

Federal Reserve Governors vote at every FOMC meeting as does the President of the New York Federal Reserve. Being a Governor carries more weight in affecting policy changes than being one of the other 11 Federal Reserve district presidents. Four of the 11 district presidents rotate every year...

The FOMC voted to keep the Funds rate unchanged and as I thought possible two FOMC members who thought a rate cut was appropriate dissented. This is the first time there was two dissenting votes since 1993. The rarity of dissent increased the perception that the FOMC will lower the Funds rate...

During the press conference a reporter...

The FOMC will announce its decision on the Funds rate on Wednesday and Chair Powell will host another press conference. This meeting holds the promise of drama given President Trump’s non-stop criticism of Chair Powell. Wall Street will parse every word and intonation that Chair Powell says....

The Labor Department reported that 147,000 jobs were created in June and the Unemployment Rate dipped from 4.2% to 4.1% as fewer people looked for work. Average Hourly Earnings increased by 0.2% in June and the annual gain in wage growth slowed to 3.7%, while the Average Work Week ticked down...

Housing contributes roughly 16% to GDP with 3% to 5% coming from spending on new single family homes, apartment buildings, and remodeling. Another 12% to 13% is spent on housing services which includes rent, utilities, insurance, an internet connection through cable, and...

President Trump has become more abrasive in his comments about Fed Chair Jay Powell, as his post last week illustrates. “ He’s a stupid person— stubborn mule…I've instructed my people not to do any debt beyond nine months or so. Get this guy out.. if I think somebody's going to keep the rates...

With fewer meetings left in 2025 to lower the Funds rate I thought more FOMC members would project 1 less cut in 2025. “ When the FOMC met in March there were 6 future meetings that would allow the FOMC the lower the Funds rate, but there are only 4 meetings left after the June meeting. This...

The Consumer Prices Index for May came in lower than economists had forecast. I thought the monthly increase in the CPI would be held down by declines in gas prices and airline fares. “ In May, some of the tariff inflation may be offset by a drop in gas prices nationwide and airline prices and...