Federal Reserve Chairman Jay Powell on Wednesday announced a significant shift in the central bank policy regime that moves away from its long held Phillips Curve-based trade-off between employment and inflation. This will provide the Federal Reserve more room for accommodation in an era of zero interest rate policy and position the central bank to support maximum sustainable employment without running the risk of higher inflation expectations and actual inflation. … READ MORE >
Federal Reserve
FOMC rate decision: Waiting on September
In keeping interest rates steady, the Federal Reserve on Wednesday underscored its ultra-cautious outlook and reiterated its view that the pandemic is the primary driving force within the economy. … READ MORE >
FOMC preview: Coming attractions at the Fed
The Federal Reserve’s rate decisions on July 29 will likely be remembered not for what is stated inside the policy communique. Rather, it will be long noted by what Fed Chairman Jerome Powell says at his news conference afterward regarding policy change. … READ MORE >
June rebound in industrial production may be thwarted by virus resurgence
As more businesses in the United States reopened, U.S. industrial production and manufacturing output grew by 5.4% and 7.2% respectively in June, according to data released Wednesday by the Federal Reserve. The increase marks the second month in a row of growth for these indicators after a massive decline in … … READ MORE >
The worst may be over for the manufacturing sector, but industry remains cautious
The RSM Manufacturing Outlook Index is reporting a remarkable rebound of sentiment in the U.S. manufacturing industry. But while the worst might be behind us, the index remains slightly negative at nearly 0.3 standard deviations below normal conditions, which suggests that a national recovery has yet to materialize. Moreover, damage … … READ MORE >
Will yields rise due to increased issuance of Treasury bonds? Let’s get the elephant out of the room!
Apprehension expressed by economic and financial pundits about potential runaway inflation and higher interest rates in the wake of the U.S. Treasury’s recent issuance of bonds is high. Our assessment of both the economic and policy paths strongly implies hat these worries will not become actualized in the near term. … READ MORE >
RSM’s Joe Brusuelas decodes the Fed’s new Main Street Lending Program
The Federal Reserve launched a new program on Monday to provide bridge financing to midsize firms that have been hurt by the COVID-19 pandemic. … READ MORE >
FOMC policy update: Fed signals that the worst is behind the U.S.
Policymakers at the Federal Reserve on Wednesday signaled that the worst of the pandemic-induced recession has passed as its summary of economic projections and “dot plot” rate forecast both implied that the zero interest rate policy will remain in place until the end of 2022. … READ MORE >
FOMC preview: Expect cautious tone as Fed ponders policy shift
We will soon enter the era of post-pandemic economics that will feature stratospheric government deficits necessitating the turn to a seldom used policy called yield curve control. … READ MORE >
Manufacturing sector outlook less dire than last month, but still bleak
The RSM Manufacturing Outlook Index is now 4.2 standard deviations below normal conditions, an assessment of manufacturing conditions that is not as dire as last month, but dire nonetheless. Perhaps last month’s reading of about six standard deviations below normal was an indication from manufacturers that things couldn’t possibly get … … READ MORE >