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Post by Admin/YBB on Nov 2, 2022 13:29:54 GMT -6
FOMC Statement, 11/2/22www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htmNovember 02, 2022 Federal Reserve issues FOMC statement For release at 2:00 p.m. EDT Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures. Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 3-3/4 to 4 percent. The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the pace of future increases in the target range, 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lael Brainard; James Bullard; Susan M. Collins; Lisa D. Cook; Esther L. George; Philip N. Jefferson; Loretta J. Mester; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued November 2, 2022, www.federalreserve.gov/newsevents/pressreleases/monetary20221102a1.htmNotes from above & Fed Chair Powell’s Press ConferenceFed fund rate hike by +75 bps to 3.75-4.00%. Bank reserves interest rate 3.9%. Primary credit rate 4%. More hikes are coming until the Fed sees slowdown in economic activity from the financial conditions tightening (but there is no numerical targe for a terminal rate). Inflation-expectations have stopped going up. The Fed watches core PCE and 3mo-18mo yield spread (media watches a variety of yield spreads). Over-tightening is preferable to under-tightening (or a premature pause); reason is that it is easier to fix over-tightening. QT continues at -$95 billion/mo (-$60 billion/mo for Treasuries, -35 billion/mo for MBS). Labor and job markets, and wage growth remain very strong. Consumer spending is robust. Housing is regional but isn't hot anymore. The Fed is aware of global concerns and regularly consults with other central bankers. But the Fed focus is on the US. US soft-landing is still possible but is becoming less likely due to persistence of inflation. Impacts of fiscal spending are mixed. Ethics issues at the Fed are being addressed with stronger disclosure rules and other restrictions. Edit/Add, 11/3/22. Yesterday, CME FedWatch wasn’t updated fully. Today, it is showing hikes of 50-50-25-25 (and moving around that) to the fed fund terminal rate of 5.25-5.50%. This is BAD news for both stocks and bonds (as if things weren’t bad already. Good seasonality (November 1-April 30) is a weak effect and may not help. www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
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Post by Admin/YBB on Dec 14, 2022 13:10:39 GMT -6
FOMC Statement, 12/14/22 www.federalreserve.gov/newsevents/pressreleases/monetary20221214a.htmDecember 14, 2022 Federal Reserve issues FOMC statement For release at 2:00 p.m. EST Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures. Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are contributing to upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-1/4 to 4-1/2 percent. The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the pace of future increases in the target range, 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lael Brainard; James Bullard; Susan M. Collins; Lisa D. Cook; Esther L. George; Philip N. Jefferson; Loretta J. Mester; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued December 14, 2022www.federalreserve.gov/newsevents/pressreleases/monetary20221214a1.htmNotes from Above + Powell's Press ConferenceFed funds rate +50 bps to 4.25-4.50%; (bank) reserve balance rate 4.4%; primary (discount) rate 4.5%. More rate hikes should be expected. Rates will remain higher for longer & rate cuts in 2023 are unlikely (despite the fed fund futures markets projecting so). The QT remains at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS. New economic projections were released. The jobs market is strong & labor-participation rate is low. Layoffs are restricted to techs now. The labor market may weaken by late-2023. Housing prices have weakened. But housing contribution to CPI via rents/OERs will continue to go up and may start to go down only in late-2023. Services remain strong. Goods prices have come down. The Russia-Ukraine war has caused higher energy & food prices. Despite trending lower, the inflation remains too high vs +2% average target (it will not be changing). The inflation-expectations remain subdued. The GDP growth will slow but is expected to remain positive. Soft-landing is still possible, or a shallow recession. Financial conditions & credit markets have tightened. Longer term rates have come down. Stocks have been up. China reopening may not have an immediate net effect.
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Post by Admin/YBB on Feb 1, 2023 13:09:28 GMT -6
FOMC Statement, 2/1/23www.federalreserve.gov/newsevents/pressreleases/monetary20230201a.htmFebruary 01, 2023 Federal Reserve issues FOMC statement For release at 2:00 p.m. EST Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation has eased somewhat but remains elevated. Russia's war against Ukraine is causing tremendous human and economic hardship and is contributing to elevated global uncertainty. The Committee is highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-1/2 to 4-3/4 percent. The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the extent of future increases in the target range, 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lael Brainard; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued February 1, 2023Notes from FOMC Statements & Powell's Presser
Fed funds rate hikes +25 bps to 4.50-4.75%; (bank) reserve balance rate 4.65%; discount rate 4.75%; gradual rate hikes with at least "a couple more" hikes. Wait to see the FOMC Minutes for discussions related to pause/pivot. The QT continues at -$60 billion/mo for Treasuries and -$35 billion/mo for MBS (total QT -$95 billion/mo). Financial conditions remain restrictive. Stock and bond markets are just one factor. The Fed and the bond market differ on how fast the inflation will be coming down. The Fed thinks that we are far from +2% average inflation target as PCE is +5.0, core PCE +4.4%. Price declines are visible in goods, but not in services yet. Housing has weakened, but the labor market and wage growth remain strong. Covid-19 is no longer seen as an economic risk. Debt-ceiling must be raise timely to prevent chaos; the Fed is an agent of the Treasury and cannot protect from consequences of failure; there is no coordination with the ongoing QT. State and local governments are flushed with cash and those projects may contribute to economic activity. Overtightening is preferred over under-tightening. Soft landing is possible and recession may be avoided. In the market actions that I kept an eye on, the stock market was strong and in the bond market, all Treasury rates fell (on a day of Fed rate hike announcement).
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Post by Admin/YBB on Mar 22, 2023 12:13:03 GMT -6
FOMC Statement, 3/22/23www.federalreserve.gov/newsevents/pressreleases/monetary20230322a.htmMarch 22, 2023 Federal Reserve issues FOMC statement For release at 2:00 p.m. EDT Recent indicators point to modest growth in spending and production. Job gains have picked up in recent months and are running at a robust pace; the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-3/4 to 5 percent. The Committee will closely monitor incoming information and assess the implications for monetary policy. The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the extent of future increases in the target range, 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued March 22, 2023 www.federalreserve.gov/newsevents/pressreleases/monetary20230322a1.htmNotes from FOMC Statement & Powell's PresserFed fund rate hike of +25 bps to 4.75-5.00%; bank reserve balance rate 4.9%; discount rate 5%. Guidance changed from "ongoing rate increases" to "tightening as necessary" based on future data and events. Rate cuts are unlikely this year despite market expectations. The Fed deals with fiscal policy as it comes and has no comments or input into it. Inflation is moderating but remains high; path to +2% average inflation may be long and bumpy. QT continues at -$60 billion/mo for Treasuries and -$35 billion/mo for MBS. The recent expansion of the Fed balance sheet due to temporary and short-term bank lending isn't really offsetting the QT that is for its longer-term securities. Labor market remains strong now but the unemployment rate may rise to 4.5% later this year. Economy is slowing overall. Services and consumer spending (possibly due to milder Winter) are strong, but goods and housing are weak. Risks now are to the downside, but soft landing is still possible. Banking crisis: Strong actions were taken to boost confidence in the banking system. This crisis may lead to some tightening of financial conditions. The new FTBP and Discount Window lending facilities available to all banks should protect deposits and avoid runs (some happened very quickly). The failed banks and several others were under Fed watch, but runs and collapses still happened. Fed VC Barr is leading a review of bank supervision and regulation. The CRE exposure of smaller banks isn't seen as an issue now. Resolution of Swiss Credit Suisse was a huge relief. Reaction of the stock market was mixed - first up, then down. Most Treasury rates fell on the day of fed fund rate hike.
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Post by Admin/YBB on May 3, 2023 13:58:55 GMT -6
FOMC Statement, 5/3/23www.federalreserve.gov/newsevents/pressreleases/monetary20230503a.htmPress Release May 03, 2023 Federal Reserve issues FOMC statement For release at 2:00 p.m. EDT Economic activity expanded at a modest pace in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5 to 5-1/4 percent. The Committee will closely monitor incoming information and assess the implications for monetary policy. In determining the extent to which additional policy firming 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued May 3, 2023 www.federalreserve.gov/newsevents/pressreleases/monetary20230503a1.htmNOTES Fed fund rate hike +25 bps (range 5.00-5.25%); discount rate 5.25%; bank reserve balance rate 5.15%. Data & events dependent policy flexibility is indicated going forward. The QT continues at -$60 billion/mo Treasuries, -$35 billion/mo MBS. The monetary policy is restrictive. Tight credit conditions at banks are being monitored. They may have the effect of some rate hikes, but that is unquantifiable. Inflation remains high, well above the Fed’s +2% average target. Inflation-expectations are now modest. Labor markets remain strong. There is excess demand. The FOMC will make decisions meeting-by-meeting, but cuts in 2023 won’t be appropriate. Economy has slowed down, but recession may be avoided. The US banking system is sound. This crisis has revealed some issues for small/medium banks, including unexpected & fast runs. The uninsured institutional money moved out first, and now, the retail money is moving out gradually. With the resolutions of the 3 biggest problematic banks, the banking crisis may be near the end. VC Barr has the sole and distinct constitutional role on supervision, but Chair Powell & other members do provide input. The focus now is on how the problems can be avoided in the future. Barr’s report will be implemented to the extent possible. US bank consolidations have been happening for decades. It is desirable to have small, medium & large size banks. But specific crisis-merger decisions are by the FDIC & it chooses the least costly option(s), makes related selections & any decisions on required waivers. Use of the overnight reverse repos by the money-market funds is being watched. Debt-ceiling is a fiscal issue that must be addressed timely. Consequences of a US debt default would be unknown but severe, & no one should expect the Fed to protect from those. Powell isn’t dwelling on the past but wants to control the controllable going forward.
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Post by Admin/YBB on Jun 14, 2023 12:01:42 GMT -6
FOMC Statement, 6/14/23www.federalreserve.gov/newsevents/pressreleases/monetary20230614a.htmJune 14, 2023 Federal Reserve issues FOMC statement For release at 2:00 p.m. EDT Recent indicators suggest that economic activity has continued to expand at a modest pace. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5 to 5-1/4 percent. Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy. 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued June 14, 2023www.federalreserve.gov/newsevents/pressreleases/monetary20230614a1.htmYBB NotesHawkish-hold, so the fed funds remain at 5.00-5.25%, but it could go up by 25-50 bps by 2023YE; the (bank) reserve balance rate is 5.15%; the discount rate is 5.25%. The pause now is to let the effects of Fed actions so far work given some lag. The 2-yr is a good indicator of where the fed funds may be going. The Fed doesn't want to surprise the markets (so, monitor CME FedWatch). Any Fed rate cuts may not be for 2 years. The QT continues at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS. The large Treasury issuance will further reduce financial liquidity. The Fed balance sheet is declining. The Fed is keeping an eye on money-markets. But the Fed only watches the Treasury and fiscal (by Congress) actions. The economy has slowed. The inflation has moderated but is still high (PCE +4.4%, core PCE +4.7%). The service inflation is sticky. The goal remains average +2% inflation to be achieved without causing much damage to the economy. Soft landing is possible. The labor market is tight and wages will rise, but slower growth will be desirable; labor demand still exceeds supply. The consumer spending is also strong. The Fed can only watch the news on labor strikes. Housing has slowed due to higher mortgage rates and lease renewals have been weak. Regional banking has stabilized. Credit conditions have tightened. Many small banks have significant CRE exposures and some may have trouble. The Fed is keeping an eye on systemic risks in banks and nonbank financials (that is where problems were during the pandemic). Edit/Add, 6/15/23. The CME FedWatch has to adjust a LOT to fit the Fed's narrative of possibly 2 more hikes in 2023, and no cuts for almost 2 years (Powell said so). Powell also said that he/Fed/FOMC don't want to surprise the markets, so expect lot of Fed speakers jawboning the markets into line. The CME Fed watch this AM shows hike-hold-hold-hold-cut.... www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
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Post by Admin/YBB on Jul 26, 2023 12:01:28 GMT -6
FOMC Statement, 7/26/23 www.federalreserve.gov/newsevents/pressreleases/monetary20230726a.htmJuly 26, 2023 Federal Reserve issues FOMC statementFor release at 2:00 p.m. EDT Recent indicators suggest that economic activity has been expanding at a moderate pace. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued July 26, 2023www.federalreserve.gov/newsevents/pressreleases/monetary20230726a1.htmMore details to follow. YBB NotesFED FUND rate hiked by +25 bps to 5.25-5.50%; bank reserves rate 5.4%; discount rate 5.5%. Discount Window use is up and that is being encouraged. More rate hikes are possible but at slower pace. Monetary policy is restrictive as the real fed fund rate is positive. No rate cuts in 2023, but may be in 2024 as inflation approaches +2% average target. Credit conditions have also tightened, an expected effect of Fed tightening. QT continues for Treasuries at -$60 billion/mo, for MBS at -$35 billion/mo. QT may moderate when it's time to cut rates. INFLATION is still too high, but headline inflation is down more than core inflation. Longer-term inflation-expectations are moderate. Pandemic and Russia-Ukraine war (economic) effects have normalized. The expiration of the safe grain-corridor deal has raised grain prices some, but that isn't a huge concern for now. JOBS market remains strong, unemployment rate remains low despite fed rate hikes. HOUSING, being rate sensitive, is affected as 30-yr mortgage rates are 7%. Existing homeowners don't want to move because of their low-rate mortgages, but supply of new homes is coming. ECONOMY remains resilient and strong. Effects of monetary policy lag, but these days, there are also some anticipatory moves. The Fed staff doesn't see recession, but only a soft landing. REGIONAL BANK situation has stabilized. The latest BANC + PACW merger is normal consolidation among the affected regional banks. But the Fed is keeping an eye on the situation.
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Post by Admin/YBB on Sept 20, 2023 12:01:22 GMT -6
FOMC Statement, 9/20/23www.federalreserve.gov/newsevents/pressreleases/monetary20230920a.htmSeptember 20, 2023 Federal Reserve issues FOMC statement For release at 2:00 p.m. EDT Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued September 20, 2023www.federalreserve.gov/newsevents/pressreleases/monetary20230920a1.htmYBB Notes
FED FUND rate held at 5.25-5.50%; bank reserves rate at 5.4%; discount rate at 5.5%. Possibly 1 more hike in 2023. Real & nominal rates may change differently. The base effect is in y-o-y, but the Fed also looks at monthly (m-o-m) and shorter terms changes over rolling 3m or 6m. There is some yield-curve adjustment - longer-term rates are rising more than short-term rates & that may be because stronger economy, higher supply of Treasuries, etc. Interest rate sensitivity of the economy isn't what it used to be - may be the business & household balance sheets are stronger, some consumer savings remain. QT continues for Treasuries at -$60 billion/mo, for MBS at -$35 billion/mo (Total QT -$95 billion/mo). New SEPs were available. INFLATION remains high. Fed's target remains +2% average inflation. Core PCE removes distortions from volatile food & energy, but nominal PCE is also important. Monetary POLICY remains tight - rates are higher, real rates are positive, neutral rate may be higher, ongoing QT, tight credit conditions, known lag effect of monetary policy. ECONOMY is solid. LABOR market is strong. SOFT LANDING is plausible. EXTERNAL FACTORS - high oil/gas/gasoline prices, labor strikes, possible government shutdown, etc. There are many uncertainties around. But pandemic related distortions seem to have unwound. CONSUMER confidence low. Consumer credit rising. Surveys tend to be more negative, but consumer spending is strong. Higher rates affect households differently according to their wealth levels. There are ad-hoc surveys of nonprofits and community groups to assess what may be going on with low/moderate income groups. HOUSING is mixed. Measurements are via OERs & rent/lease increases have moderated. Housing supply is constrained. High mortgage rates discourage existing homeowners (with low-rate mortgages) from moving.
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Post by Admin/YBB on Nov 1, 2023 12:26:59 GMT -6
FOMC Statement, 11/1/23www.federalreserve.gov/newsevents/pressreleases/monetary20231101a.htmNovember 01, 2023 Federal Reserve issues FOMC statement For release at 2:00 p.m. EDT Recent indicators suggest that economic activity expanded at a strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued November 1, 2023YBB NOTES Rates were held - fed funds 5.25-5.50%, bank reserves rate 5.4%, discount rate 5.5%. 1 more hike is possible. Dot plots aren't policy, but just an indication of the current FOMC thinking. QT continues at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS; total QT -$95 billion/mo. No plans to tinker with it. Its impact on LT rates is small and indirect. Fed intent is for monetary policy to be restrictive so that it can slowdown from above-trend economic growth to below-trend growth. Moreover, the Fed policy works with some lag. The Fed is not devoting lot of time to theoretical matters such as the neutral rate, etc. The Fed is aware that there will be some pain from its policies. Housing has already been impacted by 8%+ mortgage rates. Small businesses are also suffering. But the inflation target remains at +2% average. The base assumption is still soft landing, not recession. Job market has been strong. But wage growth has moderated. LT rates have moved up due to a variety of factors, but the Fed only controls the ST rates directly. Higher LT rates do add some to monetary tightening. Banking conditions are being monitored for stresses (including for their HTM & AFS holdings losses). Sufficient liquidity will be provided and the current programs will be reviewed on expiration. Basel III capital proposals are still in the comments period. Caps on card swipe fees are also in the comments period. Risks include higher oil prices, labor strikes (UAW just settled), geopolitical - Israel-Hamas, Russia-Ukraine, etc.
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Post by Admin/YBB on Dec 13, 2023 13:06:52 GMT -6
FOMC Statement, 12/13/23www.federalreserve.gov/newsevents/pressreleases/monetary20231213a.htmDecember 13, 2023 Federal Reserve issues FOMC statement For release at 2:00 p.m. EST Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of any 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. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued December 13, 2023www.federalreserve.gov/newsevents/pressreleases/monetary20231213a1.htmYBB NotesRates were maintained - fed funds 5.25-5.50%, bank reserves rate 5.4%, discount rate 5.5%. Rates are at/near peak. Rate cuts are possible in late-2024 or 2025. LT rate decline is market-driven. QT continues at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS; total -$95 billion/mo. Total QT so far -$1.2 trillion. The QT policy is independent of the rate policy. However, the Fed monitoring declining Fed balance sheet and bank reserves. Inflation has come down without hurting the jobs market, but it is still high. Fed +2% average inflation target is reiterated. The public may be unhappy because prices remain high, but low inflation won't fix that. May be rising wages can address some of that. Monetary policy is restrictive and acts with some lag. The Fed got behind the curve in starting the tightening and doesn't intend to repeat that error. Job market remains strong, but wage growth has moderated. Economy has slowed down. But it isn't expected to fall into a recession. Soft landing remains possible. Housing is flat due to high mortgage rates. New CPI data on Monday and PPI on Tuesday affected some of the SEPs.
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Post by Admin/YBB on Jan 31, 2024 13:05:10 GMT -6
FOMC Statement, 1/31/24www.federalreserve.gov/newsevents/pressreleases/monetary20240131a.htmJanuary 31, 2024 Federal Reserve issues FOMC statement For release at 2:00 p.m. EST Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; Loretta J. Mester; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued January 31, 2024www.federalreserve.gov/newsevents/pressreleases/monetary20240131a1.htmNotes by YBBRates were maintained - fed funds 5.25-5.50%, bank reserve rate 5.4%, discount rate 5.5%. Rates have peaked, but cuts may only be later in 2024. QT continues at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS; total QT -$95 billion/mo. Cumulative QT so far is -$1.3 trillion. The pace of QT may be lowered in the near future. Inflation is lower but is still too high vs +2% average target; inflation-expectations are lower. Monetary policy is restrictive as the fed fund rate > inflation-expectations. There was a lot of discussion on whether the Fed has enough confidence on the good progress made so far on inflation, economy and labor, but Powell won't commit to any timetables. Economy is strong. Labor market is tight. Both are normalizing. Housing is weak, being very rate sensitive. Lower equivalent-rents will show in the inflation data. But housing isn't Fed's direct concern; its focus is on inflation and jobs. Fed meeting with local businesses are useful for information not yet in the data.
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Post by Admin/YBB on Mar 20, 2024 12:06:54 GMT -6
FOMC Statement, 3/20/24www.federalreserve.gov/newsevents/pressreleases/monetary20240320a.htmMarch 20, 2024 Federal Reserve issues FOMC statement For release at 2:00 p.m. EDT Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; Loretta J. Mester; and Christopher J. Waller. For media inquiries, please email media@frb.gov or call 202-452-2955. Implementation Note issued March 20, 2024www.federalreserve.gov/newsevents/pressreleases/monetary20240320a1.htmPost Conference Notes by YBBRates were maintained - fed funds 5.25-5.50%, bank reserves rate 5.4%, discount rate 5.5%. Rates may be higher for longer; need more confidence in progress towards inflation goal. No specifics provided for June cut. Current policy is restrictive. Financial conditions are tight. QT continues at -$60 billion/mo for Treasuries, -$35 billion/mo for MBS; total -$95 billion/mo. Cumulative balance sheet reduction -$1.5 trillion. There was some talk of slowing down QT & being monitored are money-markets, bank reserves and liquidity. Inflation is still too high; there are some sticky areas. Target is +2% average "over time" (mentioned several times). Labor market remains tight, wages are going up at a slower pace, unemployment rate is near target. Economy is in good shape also. Housing contribution to CPI, PCE, etc is via OERs (owners' equivalent rent) & that should be lower in due course. Fed is studying & keeping up with the developments on digital currencies, CBDC, fin tech, but isn't working on a launch of digital-dollar unless Congress approves first. Fed transparency is good as-is. There were new SEP data.
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