Michael Gregory
Michael Gregory
broken course fed gets pace party properly similar tone trying
Do they really want to end the party? Of course not, ... They want to tone the party down before something gets broken or damaged, or worse, before someone gets hurt. It's similar to a marathon: if you pace yourself properly you can get to the end without overexertion. That is what the Fed is trying to do here.
appear crises far fed global ground inflation offset worry
As far as the Fed goes, it really isn't inflation on the ground that's a concern, it's inflation down the road. For a very long time, they've offset that with global concerns, but there doesn't appear to be any more world crises to worry about.
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That's certainly going to be the critical number. A number indicating employment growth, particularly increases in wages, could prompt the Fed to move by the end of this month.
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the Fed is going to want to take the more cautious road. Two months is an awful long time to wait to react to evidence, particularly if that evidence indicates the economy is starting to heat up again.
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Inflation is not a problem right now; that is not really what the Fed is paying attention to.
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There wasn't all that much of a surprise there. Clearly the risk is still there for the Federal Reserve to raise interest rates.
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The market is concerned about not if, but how much over the course of the year the Fed will move. There's been a lot of discussion about more than one rate increase, which is what's concerning the markets.
fed further moved odds past pricing several weeks
Over the past several weeks we've moved from pricing in one further move by the Fed to odds favoring two moves.
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Is there a risk the Fed has tightened too much? Not with the kind of momentum we're seeing in the economy and not with consumer confidence at record highs. People are wealthier, real incomes are growing, the housing market, while slower, is still super strong and the labor market is still super tight. I don't think the Fed is finished just yet.
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All is not quiet on the inflation front. Commodity prices and capacity constraints still pose some inflation risks.
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Claims are pointing to firm, if not firming, conditions in the labor market. Corporate profits are just huge and businesses are in a position to expand.
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I think a lot of people's perceptions are still affected by the bubble years. If you take away that four-year period when the unemployment rate was lower, you have to go back some 32 years to find an unemployment rate lower than it is right now.
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Exports should find further support from the pickup in global economic growth.
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There's little doubt out there that Greenspan will move this time around and try to put the brakes on growth a bit. The question is whether this is a one-time deal or a continuation of a series of moves meant to really keep the economy in line.