{"id":1515,"date":"2019-05-01T16:43:35","date_gmt":"2019-05-01T20:43:35","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1515"},"modified":"2019-05-01T16:43:35","modified_gmt":"2019-05-01T20:43:35","slug":"april-30-may-1-2019-fomc-meeting","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1515","title":{"rendered":"April 30-May 1, 2019 FOMC Meeting"},"content":{"rendered":"\n

In a Nutshell:<\/strong>  The decline in core inflation is due to\n\u201ctransient\u201d factors. \u2013 Fed Chair Jerome Powell<\/em><\/strong><\/p>\n\n\n\n

Decision:<\/em><\/strong> Fed funds rate target range remains at 2.25% to 2.50%.\n<\/em><\/p>\n\n\n\n

With\nthe president ramping up pressure on the Fed to lower rates, today\u2019s FOMC\nstatement and press conference took on even greater importance than usual.  Would the Fed signal that its next move would\nbe down?  Or, would it stand its\nground?  Well, the answer depends upon\nwhether you looked at the statement issued after the meeting or listened to the\nFed Chair\u2019s comments at the press conference. \n<\/p>\n\n\n\n

The\nstatement seemed to lean toward a possible rate cut.  Indeed, the members noted that \u201c\u2026 overall inflation and inflation for items\nother than food and energy have declined and are running below 2 percent.\u201d<\/em>  That seemed to signal that the Fed was\nworried about inflation decelerating and the logical conclusion was that it was\nbiased toward the next move being an easing.<\/p>\n\n\n\n

But\nthen there was the press conference. \nMultiple times, Fed Chair Powell stated that the decline in inflation\nwas likely due to transient or transitory factors.  That insistence on playing down the easing in\ninflationary pressures makes it clear that at least for now, the Fed is very\ncomfortable with its wait and see data dependency approach.  Thus, there is little reason to believe the\nFed will be cutting rates soon or even if the next move is down.  <\/p>\n\n\n\n

The\nmarkets got whipsawed by the Fed\u2019s poor communication of its view on\ninflation.  First they reacted as if\nrates were going down and then they backed it all out and even some more.  <\/p>\n\n\n\n

The\nFed is walking a difficult line given the president\u2019s insistence on trying to politicize\nmonetary policy.  Nothing less than the\ncredibility of the Fed is at stake, and I am not overstating that.  Mr. Powell blew it when he caved to the\nmarkets in December.  The economy was\nnever as bad as investors thought yet he behaved as if it was.  So, we know the markets can push him around.  If the president can also bully him, the\nconcept of an independent Fed will be damaged. \n<\/p>\n\n\n\n

For\nnow, Chair Powell has regained the high ground. \nBut he faces real risks. He make clear in an answer to a question that\npolitical issues are not part of the policy discussions, but every member knows\nwhat is going on. It could be difficult to cut rates without strong evidence\nthat either the economy is faltering or inflation is collapsing. If the Fed\nwaits too long to do so because it doesn\u2019t want to appear to be appeasing the\npresident, the economy would suffer. To the extent that is now a possibility, harm\nhas already been done to the Fed. <\/p>\n\n\n\n

(The next FOMC meeting is June 18-19,\n2019.)  <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

In a Nutshell:  The decline in core inflation is due to \u201ctransient\u201d factors. \u2013 Fed Chair Jerome Powell Decision: Fed funds rate target range remains at 2.25% to 2.50%. With the president ramping up pressure on the Fed to lower rates, today\u2019s FOMC statement and press conference took on even greater importance than usual.  Would … Continue reading April 30-May 1, 2019 FOMC Meeting<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1515","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1515","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1515"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1515\/revisions"}],"predecessor-version":[{"id":1516,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1515\/revisions\/1516"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1515"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1515"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1515"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}