The Real Economy Blog

FOMC

FOMC comment: Fed follows through on its policy shift

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The Federal Reserve followed through on its update of its long-run monetary framework, stating quite transparently on Wednesday that the policy-setting Federal Open Market Committee “will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%. The ... READ MORE >

FOMC rate decision: Waiting on September

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The U.S. economy has largely moved sideways with a downward tilt over the past month as pent-up demand waned and lower- and middle-income households pulled back on spending in anticipation of a reduced pace of fiscal aid. The Federal Reserve used its policy statement and Chairman Jerome Powell his news conference on Wednesday to underscore its ... READ MORE >

Monetary policy in an era of pandemic economics

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The Federal Reserve has moved the federal funds rate to the zero bound in a series of swift responses to the outbreak of the coronavirus and the market’s anticipation of the shock to economic growth and market stability. The Fed has put together nine different lending facilities and put forward liquidity commitments that run in the trillions. While we ... READ MORE >

Expect the Fed to stick to the script

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We expect the Federal Reserve will keep its policy rate in a range between 1.50% and 1.75% at the December FOMC meeting on Tuesday and Wednesday. The major interest of investors and policymakers will naturally be the movement in the dot plot, which we expect to move into alignment with the current policy rate, with 2020 to the midpoint of the current target ... READ MORE >

Q3’19 GDP: Consumer keeps economy from drifting toward stall speed

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Overall economic activity in the third quarter continued to decelerate with the top-line estimate indicating a 1.9% increase in growth and a 2% gain on a year-ago basis. Real final sales clocked in at a 2% increase as did final sales to domestic purchasers and gross domestic purchases. Digging through the depths of the government’s report, it appears that ... READ MORE >

Expect the Fed to cut its target rate by a quarter point

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We expect the Federal Reserve to cut the federal funds rate this week by 25 basis points to a range between 1.50% to 1.75% as the central bank attempts to offset the downward drag of the trade conflict and challenges in the domestic manufacturing sector. But policymakers, investors and firm managers should not expect clarification on the direction of ... READ MORE >

Fed preview: Difficulty and divided FOMC

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Monetary policy is difficult under the best of circumstances. The cross currents of the trade war, a modest exogenous supply shock in oil markets, political pressure from the executive branch to reduce interest rates and former colleagues suggesting the Federal Reserve get political make the rate decision resulting from the upcoming FOMC meeting one of the ... READ MORE >

Fed cuts interest rates with another cut likely in September

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Reductions or increases in U.S. Federal Reserve’s policy rate are often like trying to kill a mosquito with an anvil; they may get the job done but the fallout is always widespread and sure to cause a commotion. So it is with today’s rate cut as the Federal Open Market Committee sought to provide a cushion to a rapidly deteriorating global economic ... READ MORE >