Powell Now a Fully-Trained Puppy Happy to Please Master Market

-edited

The Fed will be patient. Gradual increases went out the window. Gee who coulda thunk?

The Fed did not hike today as expected. Investors hoped for the the word patient and the FOMC Statement said just that.

"Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes."

Statement Tracker

The WSJ's Statement Tracker highlights the changes since the December statement.

As expected.

Fed Chair Jerome Powell is now a fully-trained puppy happy to please master market.

Mike "Mish" Shedlock

Comments
No. 1-20
ML1
ML1

Trump tweeting worked. Powell became a Greenspan.

This should keep stock market floating until after the 2020 election...

BigGringo
BigGringo

What would you have him do Mish? You state that you are worried about yield curve inversions, so, if they continue to hike short rates, that is exactly what they will get! I've always thought that a slow rate of hikes is the better course of action, than the typical stair-step up until the growing economy is "choked off" as with past Feds is the better approach. So, with this slowing of hikes, what happens? Possibly the fed doesn't drive the economy to a stop with too high, too fast. Then, with a slow pace of hikes, the economy chugs along albeit with slow steady growth. Next, long rates get a chance to possibly "catch up" and head slowly higher, thus, opening the way for a further hike in the short end of the curve without the threat of inverting it!

Once again, what else would you have the Fed do? Continue hiking, with the only reason being to have enough room to lower after they have "induced" a recession?

Sechel
Sechel

what's the point in telegraphing future intentions if it all changes on a dime based on a shutdown or a head-line economics number such as slowdown in China or Europe. The Fed should hold its cards closer to its vest.

This is separate from abandoning dual mandate and simply focusing on stable prices

Blacklisted
Blacklisted

Confidence is the driver of the Invisible Hand, as capital cares more about confidence and stable tax rates than it does about interest rates. The Fed believes in the wealth affect and MOPE (Mgmt Of Perspective Economics). Unfortuneately, pensioner's confidence will get hammered due to articially low rates and govt malfeasance. What the informed feels in their bones will be felt by the average Joe by 2020, which is when rates will be off to the races.

killben
killben

I do not blame him for backpedaling. Who knows what could have happened if Dec 2018 market upheaval had turned into a credit squeeze?

He is doing all he can to wring the excess out of the system without creating chaos. Whether he will succeed only time will tell. IMO, it is unlikely and we are likely to end up with ZIRP and QE again.

If anyone has to be taken behind the woodshed, they are Greenspan and Bernanke. Not Powell.