The Fed held rates steady and issued this FOMC Statement.
The Committee decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective.
Dot Plot Synopsis
The DOT Plot is from Economic Projections.
- Thirteen participants expect no hikes in 2020.
- Four foresee a single hike.
Statement Little Changed
The above from the Wall Street Journal Statement Tracker.
Dot Plot Amusement
Two years ago, I posted this dot plot, with these comments.
Today’s dot plot is not as silly.
However, I strongly suggest the next move is another set of cuts, not hikes.
Note that not a single participant expects a cut.
Once again, fade that consensus.
Mike “Mish” Shedlock
“Note that not a single participant expects a cut.”
Martin Armstrong: “This is because the capital flows are still pointing into the USA while the rest of the global economy is showing major signs of stress. The Fed cannot lower rates when the pressures are for rates to rise due to risk factors nobody will talk about publicly.
This is simply where international analysis overpower domestic.”
Don’t expect Mish to reply to any reference to Armstrong or anything that goes against the gold bug narrative that QE will devalue the dollar and the markets are going to crash any day, which has been wrong for over 5 yrs.
I like how “Longer run” on the dot plot assumes smooth sailing. The next little financial crisis will bring ZIRP to the US and everybody knows it, even the Fed.
Leave it to Ben Bernanke and the Federal Reserve Board to take something
that used to be easy to state and make it a mouthful with zero benefit.
I’m talking about making the Fed Funds Rate a range:
“target RANGE for the federal funds rate at 1-1/2 to 1-3/4 percent.”
Why NOT 1 1/2 percent. Why Not 1 3/4 percent.
As for low (or no) inflation give me a break, are you telling me someone investing $10,000 today in Dow Jones companies is getting the same bang for their buck as anytime from 2010 -2013.
What about a first-time home-buyer, are homes cheaper today than from 2010-2013.
All CB’s have lost control of short-term rates, creating upside pressure, which is why the Fed did not cut.
I’m mesmerized at how dumb some of the comments are. Good article though. Thanks mish
Oh? What’s so dumb about the comments?
Yes please dont call the comments dumb and run away like a mouse.
The Fed doesn’t know what to do about anything. A collection of book trained idiots running a completely bankrupt country.
Debt Monetization is coming. Hear me today, understand me tomorrow, believe me later.
We already have debt monetization. It is called “QE” and it started almost ten years ago.
It started with forming of the Fed. Debt monetization is, literally, the reason for the Fed’s existence. For awhile, it was constrained by a need to feign some Gold imposed restriction on how rapaciously it could be done. But for the past 50 years, all bets have been off.
Since Nixon signed the destruction of America and The West into law, at least 90% of all purchasing power, hence wealth, has simply been stolen by debasement from productive people and handed free of charge to regime connected child brained but no doubt self righteous dilettantes. The Soviets may have managed to confiscate an even greater share of production for party members, but certainly not by much. And in The West, the confiscation has been ever accelerating. Hence, we will soon pass them, even if we possibly may still be lagging a little behind.
Debt monetization was started with the founding of The Fed. It is, literally, the reason for The Fed’s existence.
It may have been done slower in the beginning, as there was still some need to keep up pretenses, and the designated patsies werent yet reliably enough indoctrinated to be trusted to mindlessly fall for a scam “backed” by nothing but empty promises. But for the past 50 years, it has been completely unconstrained monetization and debasement running at full throttle. Population wide public indoctrination, does make it much more convenient and reawrding to be a leech.
Yes I meant more QE. Another decade is coming.
Deficit bomb detonates in 2020,causing deficits to soar to close to (at least) 500 $billion a month rippin the lid of the budget predictions which will triggers breakers (NIRP) at the fed as deficits soar to moon,which means interest alone will top 1 tril by next year…ouch!
I am wondering if those Ivory Tower Phd’s really believe they are telling the truth about the inflation rate. They must know that it doesn’t even come close to the inflation that the average persons experiences. They must know that they changed the way they measure inflation in the 90’s and that if measured the same way the inflation rate would be much higher. This is an outright charade and people are lapping it up like the mice following the pied piper. True housing costs, rent , college, and healthcare are soaring not to mention a greater than 2% rate on everyday living expenses. They will keep doing it until the SHTF. This charade is fueling the wealth gap and is probably why their is such a low birth rate as well. Another reason socialism is resonating with the proletariat. Communism takes hold when people realize finally that they are being f’d over by the elitists trying to maintain power and wealth at the expense of everyone else. The media should be pounding this out but instead are to interested in bringing down Trump. We truly have a useless media on both sides of the political spectrum.
You make some good points. The Fed. should be honest about the ‘real’ rate of inflation, raise(yes I said raise) interest rates and let the economy sort out everything else. Let the people deal with reality after the house of cards aka the American economy collapses.
I strongly believe that we have already seen the last Fed rate hike EVER.
And as for their ridiculous forecast of doing nothing for the next full year, at the first sign of serious stock market weakness and/or imminent recession, they will be cutting rates to zero so fast it will make our heads spin.
Their credibility was completely pissed away long ago.
“I strongly believe that we have already seen the last Fed rate hike EVER.”
Cycles won’t allow that to happen.
“Thirteen participants expect no hikes in 2020.”
…
I see 13 jellyfish.
At the first sign of economic weakness … market tantrum … DJT tweet tantrum … they’ll slash … with abandon.
They make it up as they go. I have the confidence they will continue the course. Did they mention the still ongoing NotQE?
Agree. They’ll start cutting after the Great Crash of October 2020.
The Fed remarks are meaningless from the perspective of what they may do, as well as interpreting what might be going on behind the scenes.
In the mid timeframe (1-3 years), try to maintain confidence in the Fed through a few minor rate adjustments, as well as deny QE-4 has started.
Long-term prognosis: huge debt monetizing followed by loss of confidence in the Fed, then ultimately the USD.