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Federal Reserve:Meetings/2023 March 22: Difference between revisions
Federal Reserve:Meetings/2023 March 22 (view source)
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- This will lead to tightening in lending guidelines, which is problematic for a economy driven by credit | - This will lead to tightening in lending guidelines, which is problematic for a economy driven by credit | ||
Bleakley's Peter Boockvar <ref>https://www.youtube.com/watch?v=rvnpsJQ0cuw&t=281s</ref> | Bleakley's Peter Boockvar <ref>https://www.youtube.com/watch?v=rvnpsJQ0cuw&t=281s</ref> | ||
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Many think the Fed wants to project the banking system is not bad enough to halt their hiking campaign, so they will hike. This no longer works, and the Fed knows it. If the market is worried and wants a hold (or cut), and the Fed hikes, the market is not assured. Instead, the move would immediately and violently blow up in the Fed’s face. So this is not about “faking out” the market into thinking all is ok. It is about matching the policy to the mood. | Many think the Fed wants to project the banking system is not bad enough to halt their hiking campaign, so they will hike. This no longer works, and the Fed knows it. If the market is worried and wants a hold (or cut), and the Fed hikes, the market is not assured. Instead, the move would immediately and violently blow up in the Fed’s face. So this is not about “faking out” the market into thinking all is ok. It is about matching the policy to the mood. | ||
== Meeting Results == | |||
The FED decided to do a rate hike of 0.25 bps, to raise the target range for the federal funds rate to 4.75% to 5%.<ref>https://www.federalreserve.gov/monetarypolicy/files/monetary20230322a1.pdf</ref> | |||
=== Notes === | |||
- They wait for credit conditions to progress to be able to assess if more rate hikes are needed. Credit tightening could replace rate hikes in the future. | |||
- Still very early to assess the credit tightening that could happen due to the banking issues | |||
- Supervision and regulation for banks will need to improve | |||
- Rate hike made as a credibility action most likely | |||
- The decision to open the new FED facility was made for the contagion risks | |||
- Rate cuts this year is not the FED baseline scenario based on current data | |||
- Recent balance sheet expansion is temporary lending to banks due to emergency liquidity needed, and not the same as QE in the effects of monetary policy | |||
- Dont see evidence that reserves are scarce at the moment | |||
== References == | == References == | ||