Thread: Fed Talk

New York Fed President John Williams gave a speech today (11/28) where he said he expects inflation to cool in the coming year but not quite to the Fed's target rate of 2%. This implies that the Fed will still need to be actively tightening monetary policy in year by his projections. John Williams avoided specifics about the coming FOMC meeting where investors expect the Fed to raise borrowing costs by 0.50%.

Fed’s Williams Says Inflation Fight Could Last Into 2024

Jerome Powell Signals Fed Prepared to Slow Rate-Rise Pace in December

This is why stocks have spiked in the last half hour.

Originally Posted by TommyIV

Jerome Powell Signals Fed Prepared to Slow Rate-Rise Pace in December


This is why stocks have spiked in the last half hour.

The Railroad deal didn't hurt either.

Here comes the Fed doo-doo-doo-doo. But is it alright?

You may know the Fed will likely raise rates by 0.5% today. But what else are they doing? The committee also will update its projections on inflation, unemployment and GDP.

Here’s everything the Federal Reserve is expected to do Wednesday

Powell stresses need for Fed’s political independence while tackling inflation

Fed Chairman Jerome Powell noted that stabilizing prices requires making tough decisions that can be unpopular politically.

In other remarks, the central bank leader said the Fed is “not, and will not be, a ‘climate policymaker.’”

The speech did not contain any direct clues about where policy is headed for a Fed that raised interest rates seven times in 2022, for a total of 4.25 percentage points, and has indicated that more increases likely are on the way this year.

https://www.cnbc.com/2023/01/10/powe...inflation.html

Markets fully price in quarter-point interest rate hike in February as inflation slows

The FOMC raised borrowing costs by 0.50% in December following a succession of 0.75% hikes. The market is convinced the early February FOMC meeting will result in a 0.25% hike.

The current probability of a 0.25% sits around 95% leaving a 5% probability for a 0.50% rate hike. A week prior the 0.25% hike was just a 76% probability. The latest economic data including today's PPI and retail sales gives economist confidence that the FOMC will be comfortable to let off the brake a bit more.

The only problem is the market could be setting itself up for disappointment.

CME FedWatch Tool

Jerome Powell has COVID:

https://www.bloomberg.com/news/artic...toms#xj4y7vzkg

Hope he recovers ok.

They seem to be on a mission to kill the economy and stock market.


Fed Governor Lael Brainard sees high rates ahead even with progress on inflation

Brainard insisted that the Fed won’t waiver in its commitment to taming prices that have come down some in recent months, but remain near four-decade highs.
Markets are assigning a near-100% probability that the FOMC will a raise its benchmark interest rate another quarter percentage point on Feb. 1.


“We are determined to stay the course,” Brainard said, using a phrase other Fed officials have echoed recently.

https://www.cnbc.com/2023/01/19/fed-...inflation.html

Originally Posted by tsptalk

They seem to be on a mission to kill the economy and stock market.

Shouldn't be a surprise to anyone. They've been consistent in saying that since August. The market chooses not to believe it.

The Federal Reserve is expected to raise rates by 0.25% today, and will likely continue with future rate hikes in order to shrink inflation to their 2% target, but at what cost? Reputable economists have warned that the Fed has misconceptualized the cause and solution to The United States' high inflation. They argue that the rate increases by the Fed solely shrink demand and harm the U.S. economy when the actual cause of high inflation comes from supply shocks and shifts in demand, not increasing demand. The minimal impact raising rates will have on inflation will be coupled with unnecessary declines in unemployment and hurt the economy.

These economists think the Fed should stop raising rates and take a different approach to the inflation problem. But borrowing costs are the Fed's most powerful tool to manipulate the economy, and they have grown determined to reach their 2% inflation goals and even worry that the recent drop in inflation could be transitory (a word we've heard before) if the Fed ends its rate hikes.

Today we will get a chance during the post FOMC decision press conference at 2:30 PM ET to see if the Fed has taken these worries into consideration or if they are adamant on their current trajectory to potentially raise rates by another 1% through 2023.


Most of this information came from a short Wall Street Journal Video.