Fed Hikes as Expected, Dot Plot of Expected Hikes Changes Significantly

The Fed did little this month but babble the same story about strong jobs and its dual mandate. Expectations did change.

Inquiring minds may wish to read the December 19 FOMC Statement.

It contains nothing but the usual drivel about jobs and maintaining its "dual mandate".

Fed Statement Tracker

The Wall Street Journal Fed Statement Tracker shows the Fed did add some language about vigilance as I expected.

There you have it. The Fed "will continue to monitor global economic and financial developments and assess their implications for the economic outlook."

How comforting!

Dot Plot September 27, 2018

​In December, 6 participants thought that hikes topped at 3.0-3.25%.

In September, 4 participants thought the Fed would stop at 3.25-3.50% and another thought the Fed would get to 3.50-3.75%.

Expectations have come down. They are still preposterously high.

Recession Baked in the Cake

It's Too Late to Matter Now what the Fed says it will do, or even what the Fed actually does do.

A recession is now baked in the cake.

Mike "Mish" Shedlock

Comments (5)
No. 1-5
Sechel
Sechel

There are still signs of bubbles. The leveraged loan market is out of control. Today's rates still feel too low may be a cause of so much mis-allocation of capital. Just look at all the financial engineering occurring on corporate balance sheets?

lol
lol

And with Big deficits piling up at a blistering (scary)pace,knocking on the door of wait for it...….$300 billion a MONTH in red ink,just skip over 2 tril jump straight to again wait for it....$3trillion a year in red ink by 2020 in a (simulated) "booming"economy!

Casual_Observer
Casual_Observer

Richard Fisher admitting they floated the stock market and warned of the risks back in 2012. Now we get to see if the stock market can survive a series of more rate hikes. He states they need more bullets in their pockets to cut later on.

MorrisWR
MorrisWR

Rates have been too low for decades and the Fed seems like they will once again hike all the way into a recession. They may need bullets but this time they will seem more like blanks. Credit markets will freeze worse than 2008 when people realize they have been screwed as before.

Realist
Realist

Mish, you complain that the Fed blows bubbles by keeping rates too low, then claim that rate expectations are “still preposterously high”. This implies that you expect the Fed to lower rates next year in an attempt to prevent the recession that you say is inevitable. If the fed decides to lower rates and reverse QT, and implement QE, in order to “stimulate” the economy, what will be the result? Will the economy turn back to growth? And you can bet that Trump will also want to “stimulate” the economy with more tax cuts and massive spending. Is there any chance that they can succeed in getting the economy growing again? By the way; I am not expecting a recession next year, though a recession in 2020 is a possibility in my book.