Posted on 09/20/2023 2:04:23 PM PDT by lasereye
The Federal Reserve kept its benchmark lending rate unchanged at a two-decade high, but suggested at least one more increase is likely between now and the end of the year as inflation remains elevated and the economy continues to perform.
The Fed's Open Markets Committee held its key policy rate at between 5.25% and 5.5%, the highest in 22 years, in a move that was widely expected from markets following a quarter point rate hike in July.
The Fed's new Summary of Economic projections, known as the dot plots, now calls for GDP stronger growth of 2.1% this year, more than double its prior forecast, with the forecast for unemployment coming down to 3.9% from a prior estimate of 4.1%.
In terms of inflation, the Fed's dot plots suggests rate-setters are seeing core personal consumption expenditures inflation, the bank's preferred measure, easing to 3.7% this year from its prior estimate of 3.9%.
The dots also suggest that 12 members of the FOMC see at least one more rate cut, with 7 indicating the need for a pause in order to determine the impact of past hikes on the economy.
"We are prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we are confident that inflation is moving down sustainably toward our objective," Fed Chairman Jerome Powell told reporters during his regular press conference in Washington.
"We remain committed to bringing inflation back down to our 2% goal and to keeping longer-term inflation expectations well anchored," he added. "Reducing inflation is likely to require a period of below-trend growth and some softening of labor market conditions. Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run."
For 2024, the Fed sees only 50 basis points, or half a percentage point, in potential rate cuts, down from the full percent indicated in the June projections.
"The decrease in the number of cuts in 2024 is one of the more telling changes this month. It means (combined with the increase in growth expectations and cut in unemployment rate for that year) that the Fed is increasingly confident that they can pull off a soft landing and that the economy can withstand higher rates for longer," said Andrew Patterson, senior economist at Vanguard.
U.S. stocks pared earlier gains immediately following the Fed decision, with the S&P 500 marked 29 points lower, or 0.82%, lower on the session while the Dow Jones Industrial Average was up 33 points. The tech-focused Nasdaq was marked 131 points lower.
Benchmark 10-year Treasury note yields were marked 4 basis points higher at 4.357% while 2-year notes jumped 8 basis points to 5.142%.
The U.S. dollar index, meanwhile, was marked 0.13% lower at 105.006 against a basket of six global currency peers.
CME Group's FedWatch now suggests a 24% chance that the Fed will lift rate by 25 basis points (0.25 percentage point), to between 5.5% to 5.75% at its next policy meeting in November, with the odds for a December hike pegged at 37.2%.
“....as economy outperforms” ????
“Economy outperforms” is a euphemism for “Inflation Still Running Rampant”
LET THEM EAT CAKE! this eventually comes with a guillotine
It’s a wartime economy. We haven’t just sent $110 billion to the Ukraine. We’ve sent military goods and services made here. That’s a lot of government dollars pumped into the economy. Dems start wars to boost the economy. It’s their modus operandi.
I assume “economy outperforms” means outperforms expectations. Which is in fact true. Many people were predicting at the beginning of this year that we’d be in a recession around this time. The economy is not great but there is no sign of a recession yet.
We’ve been in a recession since ‘22.
A recession is to back to back quarter GDP losses.
As for inflation, the federal fiscal fabricators no longer factor into equations energy and food spikes.
The only reason the economy seems to be treading water is because of multiple infusions of debt ridden cash. by means of quantitative easing and covid stimulus debt.
Wait until the real indicators come out in ‘24 which will reveal the REAL economic disaster that is now taking place in quarters 3 and 4 of ‘22.
Economy outperforms:
Here’s how..
Two Nobel Laureate economists are walking down the sidewalk. They come upon a huge dog turd. The first economist says to the second, “I’ll give you $100 if you eat that.” Second one says, “Well I don’t know but $100 is $100.” And he chows down.
They keep going and come upon another giant steaming pile. Second one says to the first “Now I’ll give YOU $100 if you eat that!” First economist says, “No problem, fork it over”. And he chows down.
They keep going and the Second says to the First, “I don’t think we gained anything: neither of us are ahead and we both ate dog shit.” The First economist says, “Well look on the bright side: We added $200 to the GDP.”
Dont know what to believe. Sure not these cruds.
lol
Yeah, consumer spending is stable, but it’s financed by drawing down of savings and increasing use of credit card debt. Soon, student loan payments are on the horizon, credit cards will begin to be maxed out, and savings tapped out. In a couple months, what will people be using to make ends meet?
question: “In a couple months, what will people be using to make ends meet?”
answer: is found between the first and third Amendments.
There have not been negative GDP quarters since those two, which were only slightly negative. Therefore we are not in a recession since ‘22.
As for inflation, the federal fiscal fabricators no longer factor into equations energy and food spikes
Energy, and maybe food, is not part of the "core inflation" number. It is in the CPI and other inflation numbers.
The money people got for Covid is said to have run out. People are racking up record amounts of credit card debt. It will not end well. But the timing is still unclear.
“It will not end well. But the timing is still unclear.”
___________________________
Agree that it will not end well. But everything I am hearing is that quarters 3 & 4 will be devastating, though the true damage to the economy will not be revealed until after the new year.
I fully expect a catastrophe in the commercial real estate market, due to several factors including vacancies. I’ve read that 1/3 of the mortgages are up for renewal this fall and several will be turned down. because of this, unrealized losses to the banks will continue to crater the financial lending markets.
The dollar is running into a BRIC wall and will soon collapse the dollar.
Energy and food costs are spiking and once again the supply chain is experiencing orchestrated set backs.
IOW, the economy will soon tank. Just as planned by NWO globalists.
Don’t forget more than 70 billion in student loan payments that restart in September. While not every debtor stopped payments, a huge number did. That money will get sucked out of the economy, causing a slow down among the cohort that “should” be buying homes and getting married.
It will not impact the markets October 1st…but it will lead to lower consumer spending, higher consumer debt, and a delay in capital purchases (cars, homes, washers, dryers, etc.) The average loan is somewhere around $350 a month. But there are 40 million debtors. It’s going to hit just about the time holiday spending is supposed to surge. That will multiply into the economy in Q4 and Q1.
buckle up for a rough ride.
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