FED

In the World, World economy 20th April 2023

Fed’s Beige Book notes that global economic activity and the outlook have remained unchanged

Link Securities | The Federal Reserve’s latest Beige Book indicates that overall economic activity and the economic outlook have remained broadly unchanged in recent weeks in most districts, although two districts saw a deterioration in their future outlook. The report noted that consumer spending and manufacturing posted flat or slightly lower growth, although auto sales were steady and travel and tourism rebounded. Banks also recorded a tightening of their lending…

In the World, World economy 14th April 2023

Fed minutes show consensus to raise rates by +25bp, but debate in favour of no rate hike intensifies

Bankinter | Fed members unanimously decide to raise rates by +25bp, the same rate hike they did in February and which compares to the +50bp hike in December. The minutes reiterate the message of the previous meeting that inflation remains elevated and that its deceleration is slower than expected. Strong labour market and GDP growth support price increases. All members approve of raising rates by +25bp and continuing to reduce…

In the World, World economy, World politics 13th April 2023

Mild recession in the United States this year

Santander | It is one of the first headlines from last night’s FOMC minutes. Fed staff members go from assigning a near 50% probability, to now forecasting a mild recession. With the Fed also nearing the end of the cycle, it is no surprise that some dissenting voices are beginning to appear, opening the door to new bouts of volatility that have not favoured the credit market (MOVE/Main correlation of…

In the World, World economy 23rd March 2023

Reaching 2% inflation to be a long schlep for the Fed: aiming for 3.6% this year, 2.6% in 2024 and 2.1% in 2025

Intermoney | The same could be said of the update of the macro picture forecasts. Economic projections are not necessarily a roadmap for policy and are subject to change. In fact, they have been changing from quarter to quarter. The projections point to inflation at 3.6% this year, one tenth of a percentage point higher than forecast in December. In 2024 it will moderate (2.6%), but it will not be…

In the World, World economy 17th March 2023

Fed to consider stricter regulation for medium-sized banks

Banca March | The collapse of SVB and Signature Bank has prompted the Fed to consider extending regulatory restrictions that so far only apply to large Wall Street banks. This would include stricter capital and liquidity requirements, as well as annual stress tests. Specifically, according to Reuters, the institution is currently reviewing the capital and liquidity requirements it imposes on banks, especially those with assets of between $100 and $250…

World economy 2nd February 2023

Powell’s dovish hints water down Fed’s stance

J.P. Marín-Arrese | The Fed’s message was tough enough, warning that the hiking cycle will go on unabated, even if it loses some steam, until inflation comes fully under control. The markets expected the quarter per cent rise in the Federal funds would prompt Powell to offset such a slowdown with a hawkish performance. Yet, in the press conference, he provided enough dovish hints to send the stocks bouncing back…

World economy, World politics 7th January 2023

Jobs and growth data won’t deter the Fed’s resolve

J.P. Marín-Arrese | Last Friday, Wall Street jumped on employment and services data. Jobs openings, while better than expected, signalled a downward path. The service sector contracted for the first time till 2020. The ensuing bullish reaction shows the markets bet the Fed might undertake a U-turn earlier than pointed out in the last FOMC minutes. Investors seem to outwit the Fed, disregarding its determination to keep rates tight enough…

In the World, World economy 5th January 2023

Fed considers it appropriate to keep rates high for an extended period of time

Bankinter| From the minutes of the Fed’s meeting of December 13th and 14th: There was no explicit mention of the possibility of an interest rate cut in 2023; rather they argue that they believe it is appropriate to keep interest rates at elevated levels for an extended period of time, although they retain the flexibility to react as appropriate to the data at any given time. The Committee expresses concern…

World economy 22nd December 2022

Uncertainty over monetary tightening hurts the economy

Juan Pedro Marín-Arrese | The Fed is running out of munition after raising its rates substantially. The narrowing margin forces it to slow down monetary tightening. Keeping unabated its previous speed would wreak havoc on the economy. Yet, Jay Powell countered any hope of further softening by delivering a relentless hawkish message at the latest press meeting that plunged stocks into utter disarray. Powell made it crystal clear at Jackon…

Jerome Powell baffled both the experts and the markets

World economy 22nd September 2022

Is Powell Ready To Do Whatever It Takes?

J.P. Marín-Arrese | While markets mildly reacted to the widely discounted rate hike and the prospect of protracted high-interest levels, the stern message delivered by Jerome Powell unsettled them. Stocks tumbled as he emphasised the Fed’s commitment to tighten its policy as long as inflation remains unabated, flying high above its 2% medium-term target. In short, he sounded ready to do ‘whatever it takes’ to curb the current price spiral….

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