“Hurry up and wait” pretty well describes the state of monetary policy today as the Fed goes further down the path of interest-rate normalization.
With the March rate hike decision, the FOMC, in my opinion, took the opportunity to fire a shot across the bow against rapidly tightening labor markets, rising consumer inflation, and stock market gains that some analysts find excessive given the current economic environment.
For more on these developments, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on March 17.
- Some analysts are starting to toy with the idea of a more aggressive Fed delivering four rate hikes this year, but we are sticking with our forecast of three.
- Despite all the action in the labor market, prices, and sentiment measures, GDP growth in the first quarter is likely to be underwhelming.
- Consumer spending appears to be slowing significantly in the first quarter.
- If GDP growth and inflation re-accelerate over the summer as we expect, the Fed can comfortably move again in September.
Today’s decision to raise the fed funds rate does not signal that the FOMC is off to the races on aggressive interest rate hikes over the next three years.Read More ›
The animal spirits that lifted the market to each new high may have hit their limits, as the S&P 500 Index has failed to advance the past few trading sessions and consumer confidence may be starting to lose momentum.Read More ›
Investors have gotten extremely comfortable with the economic environment and outlook — some would say the mood is positively complacent.Read More ›
It’s now official that the U.S. economy got back on track in the second half of 2016.Read More ›