Federal Reserve Hike Rates Another Quarter Percent As Expected

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    Helmholtz Watson

    The Federal Reserve hiked interest rates a quarter…


    Helmholtz Watson

    Highlights of Fed chair Powell press conference

    US economy is doing very well
    Sees 4th hike in 2018 as more likely
    Fed to hold press conferences after every meeting from January 2019
    The Fed Central tendencies will remain on an quarterly basis
    Recent inflation data have been encouraging but too soon to declare victory
    Recent rising oil prices will likely push inflation above 2% over next few months but should be transitory
    Fed expects to make further gradual increases in interest rates
    Over the next year or so interest rates will move close to neutral levels
    The FOMC rate forecast 2.38% at end of 2018, 3.13% in 2019 and 3.38% in 2020
    Balance sheet reduction is proceeding smoothly


    A quarter every quarter – not hard to remember that one

    Helmholtz Watson

    FOMC meeting minutes from June 2018 FOMC meeting

    Gradual hikes needed amid very strong economy though.
    Price moves support outlook for 2% inflation
    some officials: running economy to hot risks economic downturn
    Saw fiscal policy supporting economic growth
    A few beneficial saw US fiscal policy as upside risk
    Broad support for gradual rate hikes
    Many business contacts concerned by risks from a trade war
    Downside risks from emerging markets, Europe
    important to watch yield curve slope
    Fed policymakers discussed flattening of yield curve
    Fed staff gave a presentation on recession risks based on spread between current Fed funds rate expected rate several quarters ahead
    Trade worries have scaled back capital spending for some
    Policymakers voted on statement said for guidance language was no longer appropriate in light of economies strength and expected rate path
    A few Fed policymakers said Fed might want to discuss before long how to conduct monetary policy best when reserve balances fall appreciably
    Many policymakers send gradual hikes could take Fed funds rate above the neutral level sometime next year
    A few Fed policymakers said inflation temporarily about 2% could help anchor inflationary expectations
    Almost all policymakers watching rate hike: 1 policymaker said postponing hike could help push inflation expectations higher

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