Today started out very badly for the FOMC. At 8:30am the Commerce Department reported “unexpectedly” weak retail sales while at the very same time the BLS published CPI statistics that were thoroughly predictable. Markets, at least credit and money markets, have gained a clearer idea what the Fed is actually doing and why. It’s not at all what the media [...]
For once, it does seem like the FOMC was asking of its members the right question. They spent years incredulous over the lack of effect due to whatever of the multiple QE’s without changing expectations. No matter how little evidence for their initial let alone ongoing success, they would always, always keep up the “recovery is coming” narrative. In many [...]
The textbook says that whenever the central bank raises its policy rate that means tightening. Actual experience over more than just this last lost decade demonstrates that at the very least it is much more complicated than that. There is far more evidence of monetary policy being nothing more than a response, as that reverse condition can absolutely be established [...]
The FOMC voted today to raise the federal funds corridor by another 25 bps. It was the third such change and the second over the past three months. Judging by the reactions to it, you would think this is 2004 again. It is not. It is instead perfectly consistent where on a day when the media describes a “strengthening” economy [...]
In the aftermath of the “rate hike” in December, there was a rush to quantify, as far as expectations of political considerations may be attainable in such format, just how much the Fed would further “hike” in 2017 as a distillation of how good they figured the economy to be. As overall “reflation”, however, that was more of a media [...]
Whatever her other faults, and they are legion, Janet Yellen has impeccable timing. On the day the FOMC actually voted to raise the irrelevant federal funds rate, thus signifying to the world the soundness of the economic circumstances, the Federal Reserve calculated that industrial production had contracted for the first time (for the month of November). It was a significant [...]
FOMC Voting Member Esther George issued a vote of confidence for the economy, despite financial turmoil returning across asset markets again today. With front month WTI back under $30, her idea of a strong economy and anchored inflation expectations is still highly imperiled. She remains completely dogged, however, undeterred for further “normalization” of monetary policy largely as the US economy [...]
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