The Fed did not hike, as expected. The Fed also shed no clues as to when it will hike. Instead, the Fed offered a statement it has been making for five years or so: The Fed expects inflation to rise to 2% ‘over the medium term’.
Medium Term
Inquiring minds may be interested in a google search for the words “Fed medium term”
There are dozens of pages on the “medium term”. Since results are date-sensitive, the recent pages consist of links that are mostly from the “near term” but I did locate a reference from 2012.
FOMC Statement
Those who wish to be bored to tears can read the today’s complete FOMC Statement. Rest assured it said nothing.
Soliciting “Medium Term” Opinions
Fed is Clueless
The Wall Street Journal reports Fed Leaves Policy Rate Unchanged, Offers No Hint on When It Might Next Move
Why no hint? Because the Fed is clueless. It has no idea when it will hike or what economic conditions will look like next quarter let alone the end of 2017.
But the Fed cannot come out and say “We are clueless, and making decisions by the seat of our pants”.
Everyone would be shocked to hear the truth, even though anyone with a modicum of sense already knows the truth.
Mike “Mish” Shedlock
– Simple. They just don’t want to admit that the FED is following the 3 month T-bill rate. And that rate has been flat since late november/early december 2016.
– The FED wants 2% inflation because that would offset the 2% productivity increase.
Well, as someone once said, if economies could be run by a bunch of credentialed old bozos in suits, communism would have worked.
https://cdn.meme.am/cache/instances/folder9/500x/66738009.jpg
In fairness, Trump is a huge wildcard which doesn’t usually exist, but if they say that he will tweet bad things about them
They are scared of the bubble bursting, which could give Trump the opening to take away some of their power.
as he should. 🙂
IMHO they will continue to “jawbone”, do nothing, and then hike by 25 bps in December (barring a recession in the meantime) – as they have done the past two years.
At this pace, it will take them until 2030 to “normalize” rates – so today’s 2.474% yield on the 10-year T-Note is compltely absurd.
Agreed.
And if we dip into recession, they’ll give back that meager 25bp in a heartbeat (as if it would make any difference). 100% reactionary. The Fed has no clue & no ammo.
At some point, Trump will confront the Fed/banks… could be interesting.
Why employ these clowns when a parrot can do the job?
There is only one way to set interest rates to balance the needs for capital with its supplies, and that is with a free market for interest. Yes, it would crush the Treasury because of its massive debt, and would require a decrease in federal expenditures while perhaps increasing taxes. but the private sector could plan, earn a return to savings, and this would encourage savings and the expansion of investment capital.
The Keynesians are clueless. They take a small part of all the forces which drive economics and extend that to ignore the destruction of private capital and investment by their printing money.
After the tech crash, Greenspan raised the rate one quarter point at each meeting. Yellen is raising one quarter point each year.