We are open to the possibility, but that would probably require a decent set of consumer spending numbers over the coming months and some very solid jobs gains that contribute to further wage pressures." This has been raised as a potential course of action by St Louis Fed President James Bullard. "That said, the weakness in GDP makes it less likely that we will hear the Fed explicitly making the case for a more aggressive 75bp hike at the June or July FOMC meetings. Indeed, we don't expect inflation readings to drop meaningfully below 4% before year end." Wages are rising rapidly amid a dearth of workers and this will contribute to keeping inflation elevated through this year. "Moreover, consumer spending remained firm and the contribution from investment was solid and we expect this to continue into the second quarter. "What's priced for Fed tightening and how it stacks up against previous cycles?" "The Federal Reserve is widely expected to raise its policy rate by 50 basis points next Wednesday as 8%+ inflation and a tight labour market trump the surprise 1Q GDP contraction attributed to temporary trade and inventory challenges." We continue to see the risks skewed toward swifter, more aggressive action" The negative 1Q GDP print will be shrugged off with quantitative tightening also announced. And once again in September, saying he wasn’t happy about the interest rate hike."A 50bp ( basis point) interest rate hike from the Federal Reserve is widely expected given recent commentary from officials and the fact inflation is well above target and unemployment is just 3.6%. Then again in August, Trump complained to a crowd of Republican donors at a fundraiser in the Hamptons about Powell’s rate hikes. In July, after the Fed’s second rate hike of the year, Trump expressed displeasure with the decision, breaking tradition with his vocal criticism of the Fed and implying that he would pressure the Fed to do something about it. The WSJ reported back in November that Trump was not happy with Treasury Secretary Steven Mnuchin, casting blame on him for the appointment of Powell, who continues to raise rates. Good luck!Īnd this certainly isn’t the first time Trump has called for lower rates. Feel the market, don’t just go by meaningless numbers. Also, don’t let the market become any more illiquid than it already is. I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. As the Fed’s meeting began Tuesday, Trump tweeted that he hopes the Fed will keep interest rates low, referencing an article from the Wall Street Journal talking about why the Fed should pause its rate hikes. This all comes despite calls from President Donald Trump to keep rates low. Of course, there are still outliers, such as Goldman Sachs, which predicted the Fed still has five (now four) rate hikes to go before it is finished.īut the Fed’s statement was dovish, and it appears FOMC members are anticipating two rate hikes in 2019, down from their previous dot-plot projection of three rate hikes. The general consensus has dropped from three to two rate hikes next year. Many experts had begun to wonder if a rate hike would happen at all in December, and are beginning to decrease their view of how many times the FOMC will raise rates in 2019. Indicators of longer-term inflation expectations are little changed, on balance.” “On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2%. “Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year,” the statement continued. “Job gains have been strong, on average, in recent months, and the unemployment rate has remained low.” “Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate,” the FOMC said in its statement. In December, the Federal Open Markets Committee elected to raise the federal funds rate by 25 basis points to a targeted range of 2.25% to 2.5%. During its two-day December meeting, the Federal Reserve elected to raise interest rates for the fourth and final time in 2018.īefore the December meeting, the Fed had raised rates three times in 2018 – the first time in March, again in June and finally in September.
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