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Federal Reserve:Meetings/2023 May 3: Difference between revisions
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The document omitted a sentence present in the previous statement saying that “the Committee anticipates that some additional policy firming may be appropriate” for the Fed to achieve its 2% inflation goal. | The document omitted a sentence present in the previous statement saying that “the Committee anticipates that some additional policy firming may be appropriate” for the Fed to achieve its 2% inflation goal. | ||
=== Notes:<ref>https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20230503.pdf</ref> === | |||
==== Futures rate hikes ==== | |||
* ln light of uncertain headwinds, along with the monetary policy restraint put in place, future policy actions will depend on how events unfold. Prepared to do more if greater monetary policy restraint is warranted. | |||
* If current rates are restrictive enough is going to be an ongoing assessment | |||
* Committee, have a view that inflation is going to come down, not so quickly, but it'll take some time. And in that world, if that forecast is broadly right, it would not be appropriate to cut rates, and we won't cut rates | |||
==== Inflation ==== | |||
* Always going to have 2 percent as the target, not looking to get to 3 percent and then drop the tools. | |||
* Wages it's a couple of percentage points above what would be consistent with 2 percent inflation over time. | |||
==== '''Recession Probability''' ==== | |||
* Recession is not Powell most likely case, which is really that the economy will continue to grow at a modest rate this year. | |||
* Staff produces its own forecast, and it's independent of the forecasts of the participants. | |||
* Staff forecast was for a mild recession, and by that I would characterize as one in which the rising unemployment is smaller than is has been typical in modern era recessions. | |||
==== Debt Ceiling ==== | |||
* A failure of the US government to pay its bills would be unprecedented. We'd be in uncharted territory, and the consequences to the US economy would be highly uncertain and could be quite averse. | |||
* No one should assume that the Fed can protect the economy from the potential, you know, short- and long-term effects of a failure to pay bills on time. | |||
==== Banking Crisis ==== | |||
* Won't have to raise the rates quite as high if this would have had not happened. But the precise effect is quite impossible to estimate. | |||
* Don't have an agenda to further consolidate banks. Consolidation has been a factor in the US banking industry really since interstate banking and before that even, it goes back more than 30 years | |||
* Banking data will show that lending has continued to grow, but the pace has been slowing really since the second half of last year. | |||
* Loan Officer Survey will most likely show further tightening. | |||
* Focus is going now and going forward is going to be what's happening with credit tightening, are small- and medium-sized banks tightening credit standards, and is that having an effect on loans. | |||
== Market Expectations == | == Market Expectations == | ||