As expected, today’s FOMC meeting came with zero surprises.
In addition to its standard boilerplate about inflation, the Fed stated it would begin balance sheet normalization “relatively soon”.
Here is the full Text of the FOMC Press Release.
Key Snips
Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term. Nearterm risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.
The Committee expects to begin implementing its balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated; this program is described in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans.
Let the Debate Begin
Mike “Mish” Shedlock
Reblogged this on John Barleycorn and commented:
More maneuvering
QE replaced claims on US Treasury with claims on US central bank. Unwind will replace claims on US central bank with claims on US Treasury. No impact on M2 either way.
It is fairly easy (does require careful wording) to be “transparent” when you do not say anything that is actionable…….. The Fed (particularly Janet) is unbelievably delusional.
They have put the entire planet in financial armaggeddon mode and continue to expound barf….
It is fairly easy (does require careful wording) to be “transparent” when you do not say anything that is actionable…….. The Fed (particularly Janet) is unbelievably delusional.
They have put the entire planet in financial armageddon mode and continue to expound barf….
Who would believe what the Fed says about anything?
“Soon” = before Earth collides with the sun.
The only reason the Fed will tighten, which wouldn’t be until 2019 or so, is to damage Trump’s reelection campaign, as the Fed did in 1959 to hurt Nixon…
The economy is on cruise control similar to the ‘goldilocks economy’ from 1996-1999 (before the dot.com bubble started in 2000). GDP is likely deceptively low at 2% but consumer spending, home sales & job growth are all strong..
What planet are you reporting from?
Retail sales have been abysmal, home sales are slowing to 1960’s levels and auto sales are starting to roll over.
Other than that, how did you like the play Mrs. Lincoln?
I guess you are on planet “chicken little”. The sky is always falling and we are on the verge of a recession or depression.
In truth, the economy is doing OK. It could be a lot better. We need to make it less comfortable to not work and get more healthy individuals into the workforce and off the couch and video games.
Keep reducing regulations, get rid of Obamacare and cut taxes.
I have heard this comment over & over again I have yet to actually see it in the real world. Seems like many people believe everywhere the television & some internet ‘economist tells them’.. .
This comment I mean that news sites like fox have coined and repeat over & over
“We need to make it less comfortable to not work and get more healthy individuals into the workforce and off the couch and video games.”
Here is a link for you and a nice chart showing the percentage of young men not in the work force. Now you will have seen it.
http://www.zerohedge.com/news/2017-07-18/another-reason-men-dont-work-imaginary-world-more-enjoyable-real-world
and a quote
Between 2000 and 2015, market hours worked fell by 203 hours per year (12 percent) for younger men ages 21-30, compared to a decline of 163 hours per year (8 percent) for men ages 31-55. These declines started prior to the Great Recession, accelerated sharply during the recession, and have rebounded only modestly since. We use a variety of data sources to document that the hours decline was particularly pronounced for younger men.
Not only have hours fallen, but there is a large and growing segment of this population that appears detached from the labor market: 15 percent of younger men, excluding full-time students, worked zero weeks over the prior year as of 2016. The comparable number in 2000 was only 8 percent
@ Mathew – you know that is a Mish post, right? A lot of discussion followed on this site. There are western countries around with around 50% youth unemployment. Some of the factors are comparable…for example older workers have steady contracts, new workers low paid part time. Why are they happier? Maybe because they have decided to tell the system to f’ off, that it is so abject that they feel better just for openly standing their own ground… or do you think that it is all down to the latest release? I gave links in the comments that that age group watches way less TV, maybe you can provide some that show gaming overtakes the difference by a good margin? Internet doesn’t count, it is similar to time on the phone or reading.
“In truth, the economy is doing OK.”
…
Hardly. Barely moving is not “OK”. And what growth we have is courtesy of massive amount of new (unproductive) debt.
Abysmal where? certainly not in the greater Boston or “tri state” (NY, NJ & CT) regions. retail sales have been booming (‘overwhelming demand’ for many products and due to low unemployment retailers cannot find people to hire), there are cranes all over the greater Boston/Cambridge region and suburbs where new apartments & office buildings are going up all over. NYC is in the midst of the strongest economic boom in history that has not been given it deserves by the mainstream media.
Here you go Mr. Leeds.
“Here in New York we are experiencing a de-accessioning of retail space for retail businesses. We are seeing more store vacancies than I can ever recall in the last six decades.`
http://www.newyorksocialdiary.com/social-diary/2017/walking-the-avenue
I care not for your anecdotes.
I’ve countered your claims before with state revenue collections showing you are full of hot air.
Bring facts … not just your drive by observations.
“the Fed stated it would begin balance sheet normalization “relatively soon”.”
…
yeah, uh huh … sure sure … back in early 2010 just about every Fed president or governor gave speech(es) proclaiming normalization close at hand. A few:
“With this approach, the FOMC would be shrinking its balance sheet in a gradual and passive manner.”
https://www.newyorkfed.org/newsevents/speeches/2010/sac100308
“Furthermore, policymakers already face the task of unwinding a sizable balance sheet at the appropriate time and pace.”
https://www.chicagofed.org/publications/speeches/2010/03-09-nabe3-speech
How did that turn out???
Fed is stuck. They know that global monetary has changed to Eurodollar system, and that system is starved for dollars. But their political mandate is US price stability and employment. So they are doing the safe thing and falling back on the Taylor rule, which hasn’t worked for the last 10 years. Expect more “tightening” actions from the Fed in spite of lots of slack in the system.
hey Nikolai A Leeds, let’s bring facts to the table shall we, regarding the state of New York. State tax revenue for 2016 grew by only 2%, compared to 3.1% in 2015. 2017 preliminary data is just as weak as 2016. Personal income tax grew at 2.7% and sales tax by 2%, WELL BELOW TREND. Corporate income tax was down 10.4% percent year-over-year. New York is forecasting weak tax revenue growth for fiscal years 2017 & 2018. New York is already looking at higher tax rates and reduced spending. If an economy is booming, as you have stated, why is the state jacking up tax rates and slashing spending?
Central banks cannot solve a G7 wide leadership crisis by printing credit.
We the people can solve a misinformation campaign by Soros trolls by cutting cable TV — something most Americans should consider doing anyway, even if the content were better. No viewers means no advertising revenue; no advertising revenue means the media goes out of business.
If you want to know what is going on in the US economy, then tracking the decline of cable subscriptions and newspaper readership is far more informative than carrying on about what central bankers are doing.
Note that both declines (viewership / readership) started before Trump even announced a campaign, its not about him. The most bi-partisan trend in the USA is a complete loss of confidence in establishment institutions — no one trusts the NY Times/WaPo, no one trusts academia, no one trusts Congress, no one trusts big religion (faith in God is not the same as faith in the church / ministry / synagogue / mosque).
The ‘Fed’ only acts for the benefit of its owners which are the banks.
So the health of the balance sheets of the banks will determine future ‘Fed’ action or inaction.
There is little to nothing Trump can do as all possible candidates to fill the offices he can appoint are ‘bankers”.
Good analysis
Under what circumstance would banks ever want QE unwound?
A tiny, tepid and always strictly temporary “unwind,” on very rare occasions, may be necessary to keep up pretensions that the entire policy, along with the entire worldview that gave rise to it in the first place, ever had anything at all to do with anything at all, other than 100% pure institutionalized theft by the banksters, connected and privileged classes.
It won’t be much of an unwind, but after 150 years of public indoctrination that “The Expert on TV knows best,” much may not be needed.
Bloomberg and CNBC are pretty much Fed mouthpieces.
Banks want it unwound. Better spreads = higher profits.
If an economy is booming, as you have stated, why is the state jacking up tax rates and slashing spending,,
Shrinking the balance sheet is the same as raising interest rates. When the Fed Funds drop below 1%, the FOMC steps in and sells Fed assets. If the Fed holds rates, it can’t shrink its balance sheet if there is a demand for cash. Easy solution: End the Fed.
Someone – not me – suggested that the Fed give all of its securities holdings to the Social Security and Medicare portfolios, thereby helping the severe underfunded status while keeping all those securities off the market. An intergovernmental transfer. Why doesn’t that work?
Reblogged this on World4Justice : NOW! Lobby Forum..