US Fed Reserve: Better Late Than Never

The US Federal Reserve surprised the markets when they failed to indicate a pause in monetary tightening at their policy meeting in December. In retrospect, that was probably a mistake, and the chairman Jay Powell has now responded to severe market pressure by indicating that the Federal Open Market Committee may pause further tightening  Since the December meeting, markets had been indicating that the Fed’s probable policy stance in 2019 would be “too tight” to deliver on the central bank’s mandate of maximum employment with price stability, defined as 2 per cent inflation. On this interpretation, the Fed had made an error by tightening too much. Annoyingly for believers in rational economic analysis, President Donald Trump’s critical tweets about Fed policy were not entirely wrong about that, and on Friday Mr Powell implicitly admitted as much. Two shocks hit the US and global markets towards the end of 2018. The first was a contractionary demand shock from China, confirmed by the recent sharp declines in nowcasts for that economy; this led to downgrades in global activity forecasts, with a drop in US business surveys and inflation data. The second was that the Fed largely ignored these developments, leaving its policy guidance basically unchanged in December. The key result of these two shocks has been a major downgrade in the market’s view of inflation risks over the relevant horizon for monetary policy. There are two ways this episode could end. A good conclusion would be reached if US growth remains firm, which remains Mr Powell’s central expectation. The markets would then eventually accept that the central bank is right about growth, inflation and the need for “appropriate” rises in policy rates. A less happy alternative is that market turbulence continues, and contributes to a further weakening in growth and inflation projections.
https://www.ft.com/content/c8e2a308-0e96-11e9-a3aa-118c761d2745

 

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In my opinion, any rate pause at these low levels is a sign of bad things for the economy... The Fed will not stop until we are already in a recession

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The Fed is a tool of the financial elite against the people....

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 "The Fed " is obviously funneling money to Wall Street.

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It's getting interesting: 
Federal Reserve Chairman Jerome Powell says he would not resign if pressured to do so by President Donald Trump. "No," Powell answered simply, when asked Friday morning during a panel at the annual American Economics Association conference alongside former Fed chairs Janet Yellen and Ben Bernanke. Trump has repeatedly criticized Powell for continuing to tighten monetary policy, saying on Twitter that it's the "only problem" with the economy. The President has also asked advisers amid increasing market volatility in recent weeks whether he can fire Powell.

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The Fed is here to provide liquidity. The lack of it caused the Great Depression.  Every bank has money in a crisis now and they manage the banks reserves to high levels.

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