Divided Fed Holds Off On Rate Hike, Sees Slower Tightening Path

Investors Business Daily ^ | September 21, 2016 | JED GRAHAM

[expat_panama]

The Federal Reserve left interest rates unchanged Wednesday after its two-day policy meeting, as expected, and longer-term rate projections show an even slower pace of increases.

Still, policymakers painted a mostly upbeat picture about the job market and overall growth and signaled that the Fed's key rate will rise before year-end.

Markets have increasingly been pricing in a December hike... ...Fed's forecasts show policymakers expect three rate hikes through the end of 2017, down from five at their June meeting. The estimate for the fed funds rate in 2017 has slipped to 1.1% in 2017 from a 1.6% view in June, 2018's views dropped to 1.9% from 2.4%, and the longer-run forecast is now 2.9% vs. 3%.

Investors seemed pleased with the Fed's intentions, sending stocks significantly higher and the Nasdaq to an all-time best...

..."Our decision does not reflect a lack of confidence in the economy," Yellen said.

But she added that labor market slack is being taken up at a slower pace. And the Fed's "cautious" approach on rates reflects her belief that with rates near zero it would be easier to tighten quickly if necessary than to cut rates rapidly.

Even though economists see a November rate hike as almost unthinkable given the presidential election just days later, Yellen stressed that the meeting would be a live one, meaning a rate move is possible.

U.S. stocks opened higher on the BOJ moves as well as on strong earnings from Adobe Systems (ADBE) and FedEx (FDX), but had erased most of those gains heading into the Fed announcement at 2 p.m. ET...

[Sirius Lee]

"Our decision does not reflect a lack of confidence in the economy," Yellen said.

Correct. The decision was completely political.

[DoodleDawg]

Correct. The decision was completely political.

Hard to tell that without knowing what the FOMC vote was.

[RFEngineer]

The fed will never hike rates again. Everyday we borrow more money making it less likely any rate hike will ever occur.

[ground_fog]

they will raise after a Trump win and blame the crash on Trump. They were never going to raise rates..they can’t and they know it..the Obama Yellen ponzu scheme was always going to end very badly.

the rich got richer while the rest of America burns

[sphinx]

Very possible.

[Flick Lives]

Expect to see the word “unexpected” crop up next year.

Command economies always, always fail.

[Leaning Right]

The fed will never hike rates again. Everyday we borrow more money making it less likely any rate hike will ever occur.

I can see them eventually raising rates a quarter point or so, just to give them room to lower rates later as part of some "stimulus">

But in general I think you're right.

[expat_panama]

Happy last day of summer and "Uptrend Resumes" day!  Stocks shot up a % (which is a big jump after months of 'flat'ulance) in rising volume, the S&P is almost back up over its bearish 50 day moving average (but not quite) and the NASDAQ hit an all time high (by a fraction).

Humph.

Anyway, futures have both stocks and metals up another percent now while gold and silver nudge back up to the higher levels of the current trading range (now at $1,333.15 and $19.82).

 

Here's what the fed wished they'd known yesterday:\

8:30 AM Initial Claims
8:30 AM Continuing Claims
9:00 AM FHFA Housing Price Index
10:00 AM Existing Home Sales
10:30 AM Natural Gas Inventories

--and:

My Best Stock Market Advice: 32 Years In the Making - Ken Fisher, Forbes
Neither Trump Nor Clinton Victory Will Cheer Markets - Doug Kass, RM
Fed Decisions: How the S&P Performs Historically - Mark DeCambre, MW
The Meaning of Marx In a Capitalistic World - Michael Kazin,New Republic
IRS Commissioner Should Be in Prison - Kevin Williamson,National Review
Elections Have Consequences for the CA Economy - Carson Bruno, RCM
The Economics of the 2016 Candidates - Richard Rahn, Washington Times
Trump Can Legally Run His Company From Oval Office - Tim Mak, TDB
My Plan for Helping the Poor in America - Hillary Clinton, New York Times

[SaveFerris]

OOPS

Did Janet Yellen almost faint at this one, too?

Or did she have a seizure, was it?

[RFEngineer]

Last December, when they “sort of” raised rates a quarter point, the markets squealed like stuck pigs.

I don’t think it’ll ever happen again.

[Wpin]

They cannot raise the rate...we have almost no growth in economy, weak demand for employment, and a large portion of our population making less than 8 years ago.

Our debt is also a hindrance...can you imagine the increase in interest costs for each .25 point increase in interest rates.

[SharpRightTurn]

The economy is in the toilet and everyone except Obummer’s millionaire and billionaire buddies and fellow travelers knows it. And the Fed appears to be intent on leaving it that way.

[Hambone 1934]

Can`t blame it on Trump,since he called them out on it already.He can take credit for showing the world what morons they were...Obama’s legacy will go through the shredder with President Trump..

[mj1234]

thank you!

Finally someone else sees the HOLE the whole world is in -

MASSIVE DEBT!- most of it to pay for Socialist/communist welfare policies- (second is National defense)

imagine if they Raised the interest rate a Half a point!

Global DEEP recession- we are stuck...well sort of-

HOW about I TAX everyone’s ROTH IRA !
How about I TAKE a percentage of ANY savings you have over
Let’s say $200K!

Think it will not happen?- look at Cyprus

[Buckeye McFrog]

I think we all learned from James Comey over the summer that after eight years of Obama absolutely EVERY institution in this country has been thoroughly politicized.

Blowing it up and starting over is increasingly looking like the only solution.