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 (21)
No. 1-20
Sechel
Sechel

The Fed always acts this way. On the interest rate front I don't see Powell acting any differently than Yellen might have.

Mish
Mish

Editor

Nearly everyone expected Powell to be different - He wasn't

WCVarones
WCVarones

Bring out the Gimp!

Bam_Man
Bam_Man

Powell claims "everything is awesome", yet capitulates on rates and balance sheet run-off. God only knows how EXTREME the Fed's panic response will be when recession actually hits. Better get your hands on some Gold now, my friends.

Realist
Realist

Completely predictable.

AWC
AWC

Like, duh? We didn't really think the Fed was going to pop it's own wealth effect bubble,,,did we? And we're only talking equities. Wait until Mr. Bond Market speaks. It's a much bigger bully than stawks.

2banana
2banana

Is the Great QE unwind still going forward?

This is what is really driving the end of cheap and easy money....

truthseeker
truthseeker

Now at 50 billion a month I still don’t think he is going to stop QT entirely. What do you think Mish?

lol
lol

Up next rate cuts to the bone,Nirp ,and epic (biblical) levels of money printing,central banks worldwide oiling and waxing the printing presses …...stand by!!!

Tengen
Tengen

Pretty pathetic the Fed only tightened to about 2.5% this cycle, with quarter point baby steps no less. They made it to 5.25% last time, for around a year (mid '06 to mid '07). Now the only question is once they cut, will they go back to ZIRP or all the way to NIRP?

Six000mileyear
Six000mileyear

Central banks have always followed the markets. Investors want to believe the FED is somehow in control of the market because such beliefs give confidence to taking risks.

Webej
Webej

Pretty symmetric !

Boot6761
Boot6761

Cant figure out who Powell is bowing to? Trump? Dimon? Solomon? Private Equity evolved for a reason....

RonJ
RonJ

So, what is happening with the balance sheet roll off?

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.

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.

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

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?

ML1
ML1

Trump tweeting worked. Powell became a Greenspan.

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