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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.
Did Powell also say that current monetary policy and financial conditions are restrictive but may or may not be sufficiently restrictive to achieve the dual mandate but overall appear to be in balance. I also thought some reporters tried to bait him to say more rate hikes are coming but he would not bite. I was not well during the presser and was dosing off and delirious most of the time. So, it is possible I dreamt the above but took it to mean rate hiking has reached its peak, with the Fed reserving the right to hike more - sort of a dovish pause.. overall, Powell appeared more relaxed (dovish) than at anytime since starting to hike rates.
I haven’t read the statement. I did sorta listen to most of the news conference. What caught my ear in response to a reporter’s question was an instance where after repeating the normal language per the 2% inflation goal and possible future rate increases, he added at the end of the sentence what sounded like* “without doing great damage (or harm).”
* I might not have that exactly correct. But, whatever he added seemed to be a slight modification in the normally strident tone. Anybody happen to catch that remark? Might be what risk markets have seized on. Dunno.
@hank, if I recall correctly, he used the phrase “risks appear to be balanced.” That is risks from doing too much or not enough. That is slightly more dovish from last presser and follow up media appearances where they emphasized risk management.
YBB is a good note taker. I can’t listen and take notes at the same time. I read his notes every time for sure for the details I may not remember later.
Equities have been enjoying bounces after the Fed doesn't raise rates. And then Mr. Market looks around, and gets bummed out because everyone is still socking it away in ST bonds.
Maybe this time will be different. But, next month we get the debt ceiling, and another Fed meeting. I'm not quite ready to walk about the cabin.
No single location for 12 Fed Bank press/media info. You would have to go to EACH Fed Bank site and look under Press/Media for schedules. For example, here is for NY Fed Prez, https://www.newyorkfed.org/press#public-engagements
Note that the US Fed system is unusually complicated. Federal Reserve Board is appointed by the President with the consent of Congress. But the 12 Fed Banks are really private institutions "under federal supervision". Each Fed Bank has its own Prez, Board, staff, website, etc. FOMC is a public-private committee with up to 7 Fed Governors, NY Fed Prez (permanent), 4 rotating Fed Prez. That is why the Federal Reserve site has info ONLY on Fed Chair, Vice-Chair, Governors, and NO DETAILED INFO on Fed Banks.
In Q&A, Powell firmly rejected what the climate-protesters wanted him to do - use the Fed to force banks to somethings that haven't cleared the Congress. Somewhere during the interruption, he also dropped the F-bomb and that is all everyone seems to be reporting. Speech Text https://www.federalreserve.gov/newsevents/speech/powell20231109a.htm
F-bomb is towards the beginning of his speech (7:54 min mark in the above video) when he was ushered away as a precaution from the protesters. I think he said "Close the Fucking door," directed more towards the organizers (rather than the climate protesters).
Comments
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.
https://ybbpersonalfinance.proboards.com/post/1238/thread
Did Powell also say that current monetary policy and financial conditions are restrictive but may or may not be sufficiently restrictive to achieve the dual mandate but overall appear to be in balance. I also thought some reporters tried to bait him to say more rate hikes are coming but he would not bite. I was not well during the presser and was dosing off and delirious most of the time. So, it is possible I dreamt the above but took it to mean rate hiking has reached its peak, with the Fed reserving the right to hike more - sort of a dovish pause.. overall, Powell appeared more relaxed (dovish) than at anytime since starting to hike rates.
Get well!
I haven’t read the statement. I did sorta listen to most of the news conference. What caught my ear in response to a reporter’s question was an instance where after repeating the normal language per the 2% inflation goal and possible future rate increases, he added at the end of the sentence what sounded like* “without doing great damage (or harm).”
* I might not have that exactly correct. But, whatever he added seemed to be a slight modification in the normally strident tone. Anybody happen to catch that remark? Might be what risk markets have seized on. Dunno.
Nice write up by @BaluBalu.
YBB is a good note taker. I can’t listen and take notes at the same time. I read his notes every time for sure for the details I may not remember later.
Maybe this time will be different. But, next month we get the debt ceiling, and another Fed meeting. I'm not quite ready to walk about the cabin.
Powell speaks again next Wednesday & Thursday but other members of the Federal Reserve Board speak before then, starting tomorrow.
https://www.federalreserve.gov/newsevents/calendar.htm
Does anyone know where I can access in a single location the speaking schedule for the Regional Fed Presidents?
https://www.newyorkfed.org/press#public-engagements
To go to 12 Fed Bank sites, use https://www.federalreserve.gov/aboutthefed/federal-reserve-system.htm
Note that the US Fed system is unusually complicated. Federal Reserve Board is appointed by the President with the consent of Congress. But the 12 Fed Banks are really private institutions "under federal supervision". Each Fed Bank has its own Prez, Board, staff, website, etc. FOMC is a public-private committee with up to 7 Fed Governors, NY Fed Prez (permanent), 4 rotating Fed Prez. That is why the Federal Reserve site has info ONLY on Fed Chair, Vice-Chair, Governors, and NO DETAILED INFO on Fed Banks.
Speech Text https://www.federalreserve.gov/newsevents/speech/powell20231109a.htm
Do not overlook Gita's prepared remarks, especially cautioning against taking the foot off the brakes too soon.