Tim Duy: Fed Holding Steady For Now https://blogs.uoregon.edu/timduyfedwatch/2019/12/02/fed-holding-steady-for-now-2/: 'The Federal Reserve will hold rates steady at the upcoming December FOMC meeting.... Until the outlook shifts meaningfully one way or the other, the Fed is content to sit on the sidelines.... Inflation continues to track below the Fed’s target: With neither the economy on fire nor inflation rising, the Fed has little reason to turn their attention to reversing this year’s rate cuts anytime soon.... The Fed in general, and it seems Powell in particular, has clearly had an epiphany regarding the benefits of persistently low unemployment. In prior cycles central bankers would be looking upon sub-4% unemployment rates with much more suspicion as a warning sign that inflation will soon be on the rise. The shift has substantial implications for policy; the Fed views the costs of high unemployment as sufficiently high relative to those of the risk of inflation at these levels that they very much err against the possibility of recession. This in turn lessens the possibility that Fed action or inaction helps trip the economy into recession and brightens the near- to medium-term outlooks...


#noted #2019-12-09

Comments