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

Comments (9)
No. 1-8

Looks like they are projecting a "soft-landing" in 2021, with GDP just under 2%. Yay, that's not so bad!


I agree. No recession yet. Instead, 2% growth for a few more years, followed by 1% for a few years, followed by 0 or even slightly negative for the foreseeable future after that. Don’t worry Mish. That recession will get here eventually. The only problem is that it may not end for a long time.


The Fed rarely gets an economic prediction correct. No one does. We can guess approx by conditions but the timing? The markets are priced to perfection. All we need is a trigger event.


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?


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!