The Fed is finally backing off its endless series of interest rate hikes—but only slightly:
The Federal Reserve is leaving interest rates unchanged for the first time since spring 2022, signaling a new chapter in the central bank’s fraught fight against inflation.
....The Fed also signaled more rate hikes would come before the end of the year....“In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” a Fed statement said.
It's about time. And it's about time that they explicitly acknowledged that all their previous rate increases might have enough built-in lags that they have yet to take full effect.
Kevin, that sentence you highlighted was also in the statement after their May meeting: https://www.federalreserve.gov/newsevents/pressreleases/monetary20230503a.htm
And the March meeting: https://www.federalreserve.gov/newsevents/pressreleases/monetary20230322a.htm
And the February Meeting: https://www.federalreserve.gov/newsevents/pressreleases/monetary20230201a.htm
And the December meeting: https://www.federalreserve.gov/newsevents/pressreleases/monetary20221214a.htm
And the November meeting: https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm
Nice.
You highlighted the wrong part of the article. This one is key.
What this points out is that it's unlikely we'll have a recession even as the gap between the noncyclical rate of unemployment and the actual unemployment rate disappears. Full employment, no recession.
Does the Fed have a great track record at predicting recessions? i dont believe that they do......thier macro guesstimates are fairly inaccurate.
The Feds aren't in the business of stopping recessions.
Their mandate is full employment and hitting their inflation target.
Hence, that was my reason of highlighting their expectation of 4.1% unemployment at the end of the year and how that closes the gap to the noncyclical rate of unemployment -- full employment.
My point was just to remind you that the Fed isnt particularly good at predicting recessions or the goings on of the macro-economy. Using their prediction as a basis to say that a recession is unlikely should be taken with large grains of salt given the track record of their predictions.
It looks like the previously mythical "Aterrizaje Suave" may in fact live.
On a related topic, has there been a person so tempermentally suited to the Presidency as is Joe Biden since Dwight Eisenhower? He doesn't bluster, but he doesn't shrink from a fight. He shares credit and is willing to take some of the blame, too, when it's due. The guy may be a bit ragged around the edges syntactically from time to time, but he is an Exemplary leader of a democratic republic.
They stopped raising rates. Take the win Kevin.
I agree Anandakos. I like him more and more.
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Yesterday (Wed) Bloomberg talking heads asserted that Jerome Powell sent a clear signal was that an increase would happen in July, possibly even a 50 bp hike. Today they're backing off that a bit.