Federal Reserve Keeps Rates Unchanged as Expected, No Hikes in 2019

Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
  • #20213
    Helmholtz Watson

    The Federal Reserve as expected kept rates  at…



    Fed Chair Powell Press Conference

    US economy is in a good place, goal is to sustain expansion
    We continue to expect economy will grow at a solid place
    We’ve noted developments at home and around the world require the Fed’s attention

    Growth has slowed in Europe, China and other foreign economies
    Limited data so far this year has been somewhat mixed
    Avg monthly jobs growth appears to have stepped down from last year
    On balance, retail sales data shows slower pace, business fixed investment too

    Much of today’s meeting was about what to make of various indicators
    It may be some time before economy calls for a change in policy


    Fed Powell Q&A:

    Balance sheet changes aren’t related to monetary policy
    Financial conditions are more accommodative than a few months ago
    Underlying economic fundamentals are slow
    The Chinese and European economies have slowed substantially… “clearly we will feel that”
    Chinese authorities have taken many steps to stimulate economy and we think it will stabilize
    US tariffs are small relative to size of economy’s size
    Tariffs have been a prominent concern among business contacts for some time
    Date are not currently indicating a move in one direction or another
    We see a favorable outlook for this year
    It’s a great time for Fed to be patient, watch and wait
    US household fundamentals look solid
    Not dismissing weak retail sales data
    Overall we don’t see financial vulnerabilities as high
    The trend in inflation may reflect slack or expectations
    Run up in wages isn’t troubling on inflation
    Decision on Fed’s balance sheet composition lies ahead of us
    We don’t see any data to push us in either direction


    At least he’s on point seeing how vulnerable the economy is the punters buy stocks because he didn’t raise rates – not why he didn’t raise rates – No Risk or No Fear ?


    Philly Fed president, Patrick Harker, in London

    In ‘wait and see’ mode on policy changes
    Economic risks tilt very slightly to the downside
    But the outlook remains pretty good and positive
    Expects US economic growth a bit above 2% this year
    Inflation running around Fed’s target, edging slightly downwards
    Sees one rate hike ‘at most’ this year

    Note his NOT a voter in the FOMC this year.


    Philly Fed president, Patrick Harker, in London

    Further comments by Harker

    Market has priced in less optimism than the FOMC
    Sees neutral rate as being one or two moves away
    Says inflation is not running out of control
    Dot plots not a commitment to what the Fed will do
    Would want to see inflation rise and stay above 2% for a bit before hiking this year
    Would also need to see strong labor market
    Doesn’t see circumstances for a rate hike in the short-term

    Helmholtz Watson

    Fed’s Mester: Says It’s ‘possible’ that Fed done with hikes this cycle

    No urgency to change Fed policy stance
    May need rates a bit higher if growth picks back up
    Recent data mixed, signaling that growth softened in Q1
    Overall economy doing well with respect to Fed’s goals

    Helmholtz Watson

    Minutes of the March 20 FOMC

    Several officials noted that rate views could shift either way
    Majority of policymakers said patience needed
    Majority saw rates on hold through 2019
    Several officials concerned yield curve quite flat
    Fed noted significant uncertainties around the outlook
    Uncertainty remained high over Brexit and trade but that risks of adverse outlook had fallen
    Some said economy could rebound and warrant a rate hike late in the year
    No officials said expected that a rate cut would be needed this year
    Time would be needed to assess whether Q1 weakness would spill into Q2
    Saw less of a boost from fiscal policy than expected
    Most likely outcome was a sustained expansion

    “Several participants noted that their views of the appropriate target range for the federal funds rate could shift in either direction based on incoming data and other developments. Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year.”

Viewing 8 posts - 1 through 8 (of 8 total)
  • You must be logged in to reply to this topic.