All Posts Tagged: fed funds rate
Wait a minute. What’s the argument for cutting the Fed funds rate either 75 or 100 basis points before the end of the year, again? I have the feeling that markets blew right past that question on Wednesday, and simply equated the Federal Reserve leaning toward cutting interest rates with a massive amount of monetary stimulus. That is all it took and stocks and bonds were off to the races with no interest in looking back.
Unless the Fed thinks the economy will be in recession in the next three to six months, and I don’t think a majority of FOMC members believe that today given their recent GDP and unemployment rate forecasts, the Fed might want to reserve some bullets for when they are staring a recession right in the face.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on June 21.Key observations:
• The argument for aggressive Fed rate cuts this year are pretty thin, based on employment and housing data.
• Aggressive rate cuts now could trigger an asset price bubble down the road.
• The Fed should save some of its rate cuts for when a recession is an imminent threat.
Read my full report.Read More ›
Hiring faded across the board in May. This is not just a one-off hiccup in the data, but part of a broader more prolonged pattern of labor market softening.Read More ›
For now the Fed is throwing caution to the wind and is pressing ahead with steady rate hikes this year, despite growing downside risks from trade.Read More ›
The Federal Reserve held the fed funds target rate steady at the May FOMC meeting, as was widely expected.Read More ›