The odds of a September rate hike collapsed to 15% following a speech by Fed governor Lael Brainard.
The Case to Tighten Policy Preemptively Is Less Compelling, said Brainard.
In separate speeches, two Fed presidents chimed in today with similar comments, effectively killing the odds of a September hike.
Federal Reserve governor Lael Brainard on Monday urged “prudence in the removal of policy accommodation,” arguing that improvement in the labor market hasn’t had the desired effect on inflation.
Since the impact on inflation of further improvement in the labor market is likely to be moderate and gradual, “the case to tighten policy preemptively is less compelling,” she said according to the pre-released text of a speech for delivery at the Chicago Council on Global Affairs.
Ahead of Ms. Brainard’s speech, two regional Federal Reserve bank presidents said they see little urgency to take action at the meeting, which follows a slowdown in hiring in August.
While Federal Reserve Bank of Atlanta President Dennis Lockhart said Monday that economic conditions warrant a “serious discussion” about raising rates, he didn’t “feel that we are incurring the costs of patience that put a lot of urgency on the question of raising rates.” He declined to say when he would like to see the central bank next act.
His counterpart at the Minneapolis Fed, Neel Kashkari, said in comments regarding the economy on CNBC early Monday that “there doesn’t appear to be [a] huge urgency to do anything, frankly.” Instead, “let’s get as much data as we can and let’s try to get our inflation back up.”
Not Gonna Do It, Wouldn’t Be Prudent
That sinks the idea barring exceptionally strong economic reports in the next week.
Mike “Mish” shedlock
I predict that there is a 100% chance of a rate hike sometime in the 21st century.
Lael Brainard notes the case for tightening the money supply is less compelling
http://www.maddogslair.com/blog/lael-brainard-notes-the-case-for-tightening-the-money-supply-is-less-compelling
None of this is worth much until these Fed Governors begin to address the fact that the Fed has been blowing asset bubbles for most of a decade, and that currently the concept of “understandable price” especially in the stock, bond, and commodities market is dead because of this asset inflation pressure.
Basically, the Fed has so distorted the markets in these things that there is no determinable price, and the markets are simply reacting to the fact the Fed is tightening, or easing the money supply.
We have entered a period of maximum market instability, all thanks to the Feds fiddling. The cure is for the Fed to stop, now! Let the markets settle, and rediscover price, whatever it is.
” The cure is for the Fed to stop, now! Let the markets settle, and rediscover price, whatever it is.”
I’d say that’s rather prudent of you, Maddog.
Therefore, it probably won’t happen.
Unless HRC sprouts wings and walks on water real soon there ain’t gonna be no hike.
Dammit, I want my “global bond rout” … even bought popcorn and a 12 pack …
What. A. F****ng. Surprise.
Dude. It’s only been 8 years. Show some prudence, man. My man Hillary has had a rough-enough week, the way it is. Doc says bed-rest and NO excitement. No drama, and no collapsing economies.
Just wait til December, brother. We’ll raise as like nobody’s business. Pinkie promise!
Such hubris. The next time “interest rates” rise, it will be IN SPITE OF the Fed and Fed manipulation, not because of them…
The market reacts to statements by Fed officials.
The Fed says it has to respond to data (i.e. the market).
Reminds me of title of the book ‘Tournament of Shadows’ (the phrase is attributed to one Count Nesselrode of Russia), the premise being that if two opponents can only see each other’s shadow, their actions are based on their reading of what they THINK the opponent is doing. Since the opponent is acting likewise, over time the discrepancy between their actions v/s the actual reality compounds.
The political / career cost of a wrong decision being what it is now, the ‘policy-makers’ are bound to be paralyzed, as they are simply basing their decisions on what they think ‘the market’ thinks what those decisions will be.
In other words, a perfect recipe for inaction.
Which brings us to Newton’s first law:
(to paraphrase a bit)
An object at rest stays at rest ….. unless acted upon by an (external) force.
And how would the Fed know what was prudent?
Wow! All it took was a 3% decline in the S&P 500.
What a shocker!
They tease then pull back. Tease then pull back. Tease then pull back.
You’d have to be about as dense as a bag of stones not to see the obvious pattern and not to be able to read between the lines.
They are scared s*@*&#less of raising the rates and bringing down the house of cards.
They’re stuck.
And they know whichever way they turn eventually the bottom falls out.
Be very careful, folks. They are going to orchestrate the final fall so that the rich get richer and the schmuck at the bottom of the totem pole gets creamed.
Plan accordingly….
Damm, Lucy pulled the football again.
“there doesn’t appear to be [a] huge urgency to do anything, frankly”
If you think about it, the corollary to the above statement is that rate hikes don’t matter!
Trump is right. The FED is being politicized.
The Fed sent their minions out to quell a market revolt. What else is new?
It was but expected. Unless savers, retirees and prudent people band together and go for the Fed, ‘Let them eat rates”!
Bankers primary objective is to bail out bankers. Bankers only pretend to care what they are doing to their elders with all this printing.