Christian Scherrmann (DWS) | As was expected , the Federal Reserve cut interest rates 25 base points to a range of 2.0-2.25% at the July meeting of its Federal Open Market Committee (FOMC).
Andrea Iannelli (Fidelity) | Central banks have again become the protagonists in the quarter which has just ended. A generalised movement towards more expansionary positions, with the Federal Reserve in the lead, supported risk tolerance and lifting all kinds of assets, reversing the poor returns registered in 2018.
The Federal Reserve is more or less protected from the demands of political parties. But what about the influence from ‘special interest groups’ such as the banking industry on Fed policymaking? “There is hardly be any doubt that the Fed caters, first and foremost, to the needs of commercial and investment banks, ” says a report from Degussa.
Julius Baer Research | In the six weeks since the last Federal Reserve (Fed) meeting, the world has been shaken by several events. Despite rallying equity markets, investors stay rattled and filled with unease. Yet in the US, news on the economic front has been mainly positive. Indicators such as the June employment report, retail sales, housing starts, capacity utilization and the service industry have all beaten expectations.
James Alexander via Historinhas | The Federal Reserve and other central banks like to see themselves as “data-dependent”. They sit in objective judgement of the facts of the economy as revealed by “data” and then portentously decide whether to attempt to alter the future facts with monetary tightening or loosening.
Disappointing job growth in May at roughly one-third of the expected figure, coupled with a downward revision for the previous two months, cast unexpected doubts on the US recovery. The labour market has slowed to half the pace seen a year ago.
BBVA Research | The latest personal income and outlays report by the BEA, which is the favourite indicator for the Federal Reserve to measure deflation, showed that income continued to expand at a solid pace (0. 4 % MoM) , while spending increased dramatically (1 % MoM) in April . The increase in income was in line with consensus expectations, while the consumer spending increase was significantly higher (consensus expectations stood at 0.7% MoM). The increase in consumer spending in April was the highest since August 2009 .
The recent disclosure of the April FOMC minutes has come as a shock. Investors expected a cautious wait-and-see stance by the Federal Reserve at that meeting. But now we discover that a majority of its members openly supported a rate hike at the June gathering, should macro-economic delivery prove reasonably upbeat.
Benjamin Cole via Historinhas | It is too bad in some regards that Richard “Inspector Clouseau” Fisher, the former president of the Federal Reserve Bank of Dallas, in no longer ensconced in that position. For one, he was always great copy. For seconds, he was one of the most infallible reverse indicators of Post War Era, and economic soothsayers could bet against a Fisherian proclamation with a rare calm.
Benjamin Cole via Historinhas | Probably, He Is Right. Among serious economists, the words “print more money” are not used, and of course the thought is sacrilege for many. Evidently, some prefer a decade or so of 20+% unemployment (see Spain, Greece), or the perennial loss of about 10% of GDP (the United States) to the idea of printing more money.