No Hikes, No Recessions: Minutes of the FOMC Meeting March 19-20


FOMC minutes show greater risks to the U.S. economy from the global growth slowdown and muted inflation readings.

The Wall Street Journal reports Fed Minutes: Officials See Little Need to Change Rates This Year.

Minutes of the March meeting released Wednesday showed officials see little reason to continue raising rates due to greater risks to the U.S. economy from the global growth slowdown and muted inflation readings that took more officials by surprise.

“A majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year,” the minutes said.

At the same time, the minutes show officials didn’t perceive any need to cut their benchmark rate absent a broader deterioration in the economy. Officials said their view of the appropriate setting for interest rates “could shift in either direction based on incoming data and other developments.”

Since officials last met, President Trump has said he would like to see the Fed undo its last two rate increases. Fed officials have said they will base their decisions on the economic outlook and not political pressure.

No Recessions As Far As the Eye Can See

Ridiculous Models

The weakness of inflation pressures given a strong job market and accelerating output last year has puzzled Fed officials. At last month’s meeting, they discussed reasons that inflation might have been more muted, including the prospect that the estimated level of unemployment rate consistent with stable prices is lower than previously thought.

Instead of wondering why inflation is weak, they ought to consider the absurdity of their models.

Stocks are priced beyond perfection, housing prices are so high no one can afford them, and the entire inflation expectations model they use is ridiculous.

Questions for the Fed

In case you missed it please see Hello Jerome Powell, We Have Questions

It will open your eyes as to the ridiculous nature of the models the Fed uses to decide interest rate policy.

Mike "Mish" Shedlock

No. 1-8

The Fed is still working on economic models from th '50's and '60's when low unemployment would trigger labor unions to demand large wage increases, resulting in inflation. Labor, always being a monopolistic market, can't be a driver of inflation anymore.

So while the Fed has no understanding of this, it is following the correct policy, which is do nothing. We do have good enough growth to maintain low unemployment, low wages, low inflation and relatively low interest rates. The Fed has hit the sweet spot. Yes assets are overpriced. But that is far more a result of the regulatory structure than interest rates. So raising rates won't have that much of an effect, unless you raise them into the teens.


This economy is about as safe as the Boeing 737 Max 800 aircraft.


gee the economy can't stand minuscule rate increases . the autopilot was disengaged.


Well, as long as the Federal Government can run $1 TRILLION+ deficits with no upward pressure on interest rates, perhaps recession can be postponed - for a while longer. Then, Katy bar the door!


Yeah Powell, we all knew the hikes were done, the question is when the cuts start and how far down are we willing to go?