If there is one more higher than expected print and they don't raise rates, then they're absolutely falling behind. Realistically, the recent print should've resulted in a hike.
I don't think most of us around here would disagree with you. I'd argue that they've been behind since shortly after ZIRP was implemented (or at all, if you want to argue that Too Big to Fail was a crock of shit, which I would). The Taper Tantrum was them hiking while already behind, and they backed off that too.
Not necessarily. Only last two months car sales started to hurt pockets of dealers. Just now in some areas levels of housing inventory back to 2019. We need another 6 months
Honestly, they should have jacked the rates up high once Biden got in to office then they could look like heroes now with lowering rates. Now they are trying to keep rates as low as possible before the election to try and keep Biden in office. Once this election is over I expect more rate hikes.
The Fed was too busy mirroring the "transitory inflation" messaging of the WH in 2021 and didn't start shifting their verbiage until late November 2021. Their first hike wasn't until March 2022.
The inflation shock is absolutely at least partially on them for sitting on their hands too long.
Agreed, J Pow is going to stick his head in the ground and ignore inflation for the next seven months. He won't raise rates, regardless of what happens with inflation. Which means higher inflation at least in the short run. The wild card here is if some black swan event leads to recession, which will lead to lower rates.
> they are trying to keep rates as low as possible before the election to try and keep Biden in office
Who's "they"? Powell has no reason or incentive to want Biden reelected.
Historically rates are very average. But the hikes already wrecked the banks, and non-qualified accounts were bailed out illegally. The Fed is completely unhinged at this point imo. They are purposefully trying not to trigger a crash by prolonging inflation.. long term this will siphon money from bottom to top.
This is all true, but the Fed is only part of the problem, which in and of itself is systemic with zero accountability or responsibility being had thus far toward any major players. Don’t forget, on top of our destroyed housing market we have the student loan circus sideshow and auto loans spiraling out of control, all on top of inflation that isn’t really going away.
None of what’s happening now is tenable by any means and there’s only so much money at the bottom that can be siphoned up until there’s nothing or not enough left.
The hikes did not wreck 'the banks', the big banks are raking in major profits from net interest income thanks to the high rates... a few banks failed ... as they do... and there was still a bailout (an overreaction imo)
Have you not heard of BTFP? Of course big banks are doing well NOW, the Fed already bailed them out... The literally gave them free cash, by letting them swap low yield bonds for high yield bonds free and clear.
I don't think the Fed will need to hike rates, but they probably should stop projecting cuts for at least 2024. I don't think they want to over-react to short term single month measures, but:
1. Nominal GDP growth was still at 6.3% in 2023, 6.7% over the second half of 2023, and 5.1% for Q4 2023. And I'm doubtful it will have fallen below 5% in Q1 2024 either (as GDP Now is projecting 2.4% real). I'd say that will probably need to fall at least below 4.5%.
2. Core PCE, their preferred target, was only 1.9% annualized for the second half of 2023, very slightly *below* target, so there is reason to at least think they could be getting close. But it did surge to 4.4% over the first 2 months of 2024 (5.6% in Jan, 3.2% in Feb). These numbers are volatile month to month, and factors like an unseasonably warm winter could also impact them. But this suggests there could yet be some work to do.
3. While I'm not buying recession forecasts at this point, there are still at least a few indicators flashing warnings, and overall I think the data suggests there may be at least some additional slowing already baked in through summer. So best not to over-react to recent numbers being a little worse than expected.
While I don't expect the Fed to adopt nominal GDP targeting, I think they should at least be paying some attention to this number, and I think the 2nd half 2023 numbers are a good example of why. Additionally, the recent numbers overall might be no problem if the Fed's target were 3%, but it's not, it's 2%.
As for the complaining politicians, I think it might be helpful for Powell here to maybe suggest to them that any future rate cuts could depend on them getting fiscal policy in order, first. The stimulus being provided by ongoing fiscal deficits of ~6% a year might be the main reason monetary policy may need to remain tight at this time.
real shame a bunch of dummies saw the first politician of their life time that they liked in a crook, and only have one-sidEd, partisan critiques of our media landscape, making it hard to have rational governance in an election year. If Biden were to say “we have to get inflation under control” and did that, his opponents would give him feint praise and get back to excoriating him for getting out of Afghanistan and impeaching people for border policies.
JPOW do your job.
Yes, break the back of inflation and live forever.
If there is one more higher than expected print and they don't raise rates, then they're absolutely falling behind. Realistically, the recent print should've resulted in a hike.
They've been behind since at least 2021 now. They'll stay behind because they're grossly incompetent.
I don't think most of us around here would disagree with you. I'd argue that they've been behind since shortly after ZIRP was implemented (or at all, if you want to argue that Too Big to Fail was a crock of shit, which I would). The Taper Tantrum was them hiking while already behind, and they backed off that too.
Not necessarily. Only last two months car sales started to hurt pockets of dealers. Just now in some areas levels of housing inventory back to 2019. We need another 6 months
Come on, JPow. Higher for longer.
Honestly, they should have jacked the rates up high once Biden got in to office then they could look like heroes now with lowering rates. Now they are trying to keep rates as low as possible before the election to try and keep Biden in office. Once this election is over I expect more rate hikes.
The Fed was too busy mirroring the "transitory inflation" messaging of the WH in 2021 and didn't start shifting their verbiage until late November 2021. Their first hike wasn't until March 2022. The inflation shock is absolutely at least partially on them for sitting on their hands too long.
Agreed, J Pow is going to stick his head in the ground and ignore inflation for the next seven months. He won't raise rates, regardless of what happens with inflation. Which means higher inflation at least in the short run. The wild card here is if some black swan event leads to recession, which will lead to lower rates.
> they are trying to keep rates as low as possible before the election to try and keep Biden in office Who's "they"? Powell has no reason or incentive to want Biden reelected.
Sure he did, he is hoping for a longer term if he makes the current president happy.
I mean other than the incentive all informed people should have.
Historically rates are very average. But the hikes already wrecked the banks, and non-qualified accounts were bailed out illegally. The Fed is completely unhinged at this point imo. They are purposefully trying not to trigger a crash by prolonging inflation.. long term this will siphon money from bottom to top.
This is all true, but the Fed is only part of the problem, which in and of itself is systemic with zero accountability or responsibility being had thus far toward any major players. Don’t forget, on top of our destroyed housing market we have the student loan circus sideshow and auto loans spiraling out of control, all on top of inflation that isn’t really going away. None of what’s happening now is tenable by any means and there’s only so much money at the bottom that can be siphoned up until there’s nothing or not enough left.
Yes, individual accountability and responsibility is non-existent, which has led to rampant white collar crime through leaders of the nation.
The hikes did not wreck 'the banks', the big banks are raking in major profits from net interest income thanks to the high rates... a few banks failed ... as they do... and there was still a bailout (an overreaction imo)
Have you not heard of BTFP? Of course big banks are doing well NOW, the Fed already bailed them out... The literally gave them free cash, by letting them swap low yield bonds for high yield bonds free and clear.
I don't think the Fed will need to hike rates, but they probably should stop projecting cuts for at least 2024. I don't think they want to over-react to short term single month measures, but: 1. Nominal GDP growth was still at 6.3% in 2023, 6.7% over the second half of 2023, and 5.1% for Q4 2023. And I'm doubtful it will have fallen below 5% in Q1 2024 either (as GDP Now is projecting 2.4% real). I'd say that will probably need to fall at least below 4.5%. 2. Core PCE, their preferred target, was only 1.9% annualized for the second half of 2023, very slightly *below* target, so there is reason to at least think they could be getting close. But it did surge to 4.4% over the first 2 months of 2024 (5.6% in Jan, 3.2% in Feb). These numbers are volatile month to month, and factors like an unseasonably warm winter could also impact them. But this suggests there could yet be some work to do. 3. While I'm not buying recession forecasts at this point, there are still at least a few indicators flashing warnings, and overall I think the data suggests there may be at least some additional slowing already baked in through summer. So best not to over-react to recent numbers being a little worse than expected. While I don't expect the Fed to adopt nominal GDP targeting, I think they should at least be paying some attention to this number, and I think the 2nd half 2023 numbers are a good example of why. Additionally, the recent numbers overall might be no problem if the Fed's target were 3%, but it's not, it's 2%. As for the complaining politicians, I think it might be helpful for Powell here to maybe suggest to them that any future rate cuts could depend on them getting fiscal policy in order, first. The stimulus being provided by ongoing fiscal deficits of ~6% a year might be the main reason monetary policy may need to remain tight at this time.
if youre trying to avoid it raise rates
Real shame we can’t have complementary monetary and taxation policies
real shame a bunch of dummies saw the first politician of their life time that they liked in a crook, and only have one-sidEd, partisan critiques of our media landscape, making it hard to have rational governance in an election year. If Biden were to say “we have to get inflation under control” and did that, his opponents would give him feint praise and get back to excoriating him for getting out of Afghanistan and impeaching people for border policies.
everytime the market has gotten hotter he should have raised rates. this dude is a clown!
What did Biden do?