Does Fed Chair Jerome Powell need new glasses? Why can’t he see clearly from his board meeting today that keeping in place the purchase of $billions in asset purchases (per month) will do nothing but exacerbate the problem and fuel further inflationary pressures? March is two months away while many Americans are having to make a trade-off at the grocery store – do I want to eat steak tonight, or would I rather fill my car with gasoline? I mean my God!
Tightest labor market in a century [probably], combine that with outsized GDP, combine that with rising wages, and combine that with runaway inflation, and what’s been the “age old” answer to this dilemma?
Let’s see: 11 million Job Openings + High GDP Output + Worker Wage Gains + 6-10% annual Inflation = “Alex, how about give me “Interest rate hikes” for a Billion?”
Where do these Federal Open Market Committee Members get off? They meet ten months out of the year, and what the Hell have they been doing during those meetings, comparing their college football picks? Certainly not focusing on Monetary Policy. This is going to end in a debacle. You can over-ease in these roles just like you can over-tighten, but this FOMC has clearly waited way too long to react to this crisis… and I fear that as of today, this “indecision” on rates may lead to unintentional consequences, things they did not foresee.
When the financial markets are signaling (even expecting) a hike in rates and an immediate halt in all FOMC asset purchases, what you do is you give them what they expect! Because their expectations are reasonable given the circumstances, they are very reasonable. What’s not at all reasonable is what this Federal Open Market Committee just did today. Confusing financial markets always ends in some kind of disaster… that you can take to the bank!
My “He said what” moment came when he said it was impossible to forecast the future of the fed. What? JP, you did in November, remember? Financial stability is the mandate which includes a strong dollar. His Q&A was horrible at best. At least bond yields popped with the dollar
(hawkish) but all in all a D-.
Agreed, a D-. However, after thinking about that whole rate decision meeting and his after announcement news conference. In order for logic to prevail in this situation, the committee is rolling the dice to hedge someone’s bet. The bet that in two more months inflation cools down, that’s the only thing that can make sense here given their decision to keep buying treasury securities when inflation has a 7% handle. That’s not a bet I would have made. The financial markets were certainly expecting a hawkish tone and it would have been justified. I guess these Fed Board members have another job lined up? Because there’ll be a Valentine’s Day [style] massacre of Fed members if they’re wrong! 🙂