Retail gasoline prices in the United States are poised to continue their recent decline as the summer driving season ends and households fall back into more traditional schedules. The average retail gasoline price has declined to $3.78 per gallon from a peak of $5.01 on June 13—a 21.2% drop—and ... READ MORE >
federal funds rate
Powell at Jackson Hole: From era of abundance to one of insufficient supply
The pandemic has been the catalyst for a seismic shift in the American economy as it shifts from an era of abundance to one of insufficient supply. For households, this implies a shift from what we call rational inattention regarding consumption to a more rational approach to spending. As ... READ MORE >
Expectations at the end of business cycles
The Federal Reserve has a blunt yet effective instrument to fight inflation: raising the federal funds rate. But using it requires a delicate balancing act. In the best-case scenario, the Fed, by raising rates, reduces discretionary spending enough to stabilize prices, and the economy continues to ... READ MORE >
Jackson Hole preview: Powell to set tone for next few years
The conversation around monetary policy among market participants has unfortunately revolved around a potential pivot by the Federal Reserve toward reducing rates because of an elevated risk of a recession. But Federal Reserve Chairman Jerome Powell will have the last word. His much-anticipated ... READ MORE >
Midyear update: An economy on knife’s edge as inflation bites
Gradually, then suddenly: That is how Mike Campbell, a character in Ernest Hemingway’s “The Sun Also Rises,” answered the question on how he went bankrupt. It’s also an apt way to think about how the United States goes into a recession. While there are always signs of financial stress and ... READ MORE >
Changes in Fed policy and their impact on the economy
After more than a decade of disinflation and the threat of deflation, the Federal Reserve is now dealing with persistent inflation resulting from a pandemic-induced supply chain shock, a surge in consumer demand and yet another oil shock. This has resulted in an abrupt shift in policy to restore price ... READ MORE >
Fed announces largest rate hike in nearly three decades as it seeks to restore price stability
The Federal Reserve lifted its federal funds policy rate to a range between 1.5% and 1.75% on Wednesday as it moves to restore price stability over the medium term. We now expect the Fed to hike the policy rate by 50 basis points in July and September and then by 25 basis points at each successive ... READ MORE >
Updated FOMC call: Fed to hike policy rate by 75 basis points
The economist John Maynard Keynes once famously quipped, “When the facts change, I change my mind.” And so it goes ahead of the Federal Open Market Committee’s policy meeting this week. Based on movements inside the rate markets, quickly changing inflation expectations and a rattled investor class, we ... READ MORE >
FOMC decision: Policy, price stability and balance sheet strategy
Price stability is a precondition of maximum sustainable employment, sustainable growth at the long-term rate of 1.8% and financial stability. The Federal Open Market Committee's decision on Wednesday to increase the federal funds rate by a half-percentage point to a range between 0.75% and 1% in ... READ MORE >
FOMC preview: Rate hikes and balance sheet reduction are up next
Next week’s Federal Open Market Committee meeting will kick off an extraordinary two months of policy decisions by the Federal Reserve in which we expect the central bank to hike its policy rate by 100 basis points. These rate increases, starting with a 50 basis-point increase on Wednesday. will occur ... READ MORE >