Fed Eyes Long Pause, No Rate Hikes in 2020

The Fed held rates steady today citing low inflation. Members expect a long pause.

The Fed held rates steady and issued this FOMC Statement.

The Committee decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective.

Dot Plot Synopsis

The DOT Plot is from Economic Projections.

  • Thirteen participants expect no hikes in 2020.
  • Four foresee a single hike.

Statement Little Changed

The above from the Wall Street Journal Statement Tracker.

Dot Plot Amusement

Two years ago, I posted this dot plot, with these comments.

Today's dot plot is not as silly.

However, I strongly suggest the next move is another set of cuts, not hikes.

Note that not a single participant expects a cut.

Once again, fade that consensus.

Mike "Mish" Shedlock

Comments (22)
No. 1-14
Rvrider
Rvrider

The Fed remarks are meaningless from the perspective of what they may do, as well as interpreting what might be going on behind the scenes. In the mid timeframe (1-3 years), try to maintain confidence in the Fed through a few minor rate adjustments, as well as deny QE-4 has started. Long-term prognosis: huge debt monetizing followed by loss of confidence in the Fed, then ultimately the USD.

Je'Ri
Je'Ri

Agree. They'll start cutting after the Great Crash of October 2020.

Maximus_Minimus
Maximus_Minimus

They make it up as they go. I have the confidence they will continue the course. Did they mention the still ongoing NotQE?

Tony Bennett
Tony Bennett

"Thirteen participants expect no hikes in 2020."

...

I see 13 jellyfish.

At the first sign of economic weakness ... market tantrum ... DJT tweet tantrum ... they'll slash ... with abandon.

Realist
Realist

The Fed and the US govt will continue to do whatever is necessary to keep all the balls in the air. If cuts or QE, or something else is necessary, they will do it. Their projections are merely their best guess. And being human, their projections, though reasonable, are unlikely to be correct.

Bam_Man
Bam_Man

I strongly believe that we have already seen the last Fed rate hike EVER.

And as for their ridiculous forecast of doing nothing for the next full year, at the first sign of serious stock market weakness and/or imminent recession, they will be cutting rates to zero so fast it will make our heads spin.

Their credibility was completely pissed away long ago.

hmk
hmk

I am wondering if those Ivory Tower Phd's really believe they are telling the truth about the inflation rate. They must know that it doesn't even come close to the inflation that the average persons experiences. They must know that they changed the way they measure inflation in the 90's and that if measured the same way the inflation rate would be much higher. This is an outright charade and people are lapping it up like the mice following the pied piper. True housing costs, rent , college, and healthcare are soaring not to mention a greater than 2% rate on everyday living expenses. They will keep doing it until the SHTF. This charade is fueling the wealth gap and is probably why their is such a low birth rate as well. Another reason socialism is resonating with the proletariat. Communism takes hold when people realize finally that they are being f'd over by the elitists trying to maintain power and wealth at the expense of everyone else. The media should be pounding this out but instead are to interested in bringing down Trump. We truly have a useless media on both sides of the political spectrum.

lol
lol

Deficit bomb detonates in 2020,causing deficits to soar to close to (at least) 500 $billion a month rippin the lid of the budget predictions which will triggers breakers (NIRP) at the fed as deficits soar to moon,which means interest alone will top 1 tril by next year...ouch!

Casual_Observer
Casual_Observer

Debt Monetization is coming. Hear me today, understand me tomorrow, believe me later.

Ted R
Ted R

The Fed doesn't know what to do about anything. A collection of book trained idiots running a completely bankrupt country.

Uptick
Uptick

I'm mesmerized at how dumb some of the comments are. Good article though. Thanks mish

TumblingDice
TumblingDice

Leave it to Ben Bernanke and the Federal Reserve Board to take something that used to be easy to state and make it a mouthful with zero benefit. I'm talking about making the Fed Funds Rate a range: "target RANGE for the federal funds rate at 1-1/2 to 1-3/4 percent." Why NOT 1 1/2 percent. Why Not 1 3/4 percent.

As for low (or no) inflation give me a break, are you telling me someone investing $10,000 today in Dow Jones companies is getting the same bang for their buck as anytime from 2010 -2013.

What about a first-time home-buyer, are homes cheaper today than from 2010-2013.

bradw2k
bradw2k

I like how "Longer run" on the dot plot assumes smooth sailing. The next little financial crisis will bring ZIRP to the US and everybody knows it, even the Fed.

RonJ
RonJ

"Note that not a single participant expects a cut."

Martin Armstrong: "This is because the capital flows are still pointing into the USA while the rest of the global economy is showing major signs of stress. The Fed cannot lower rates when the pressures are for rates to rise due to risk factors nobody will talk about publicly.

This is simply where international analysis overpower domestic."