Tag Archives: Fed Policy

Apr 25, 2019

How to Stop Worrying about Inflation

Inflation in the US averaged 1.5% annually for the last five years with a peak of 2.9%. Despite today’s low and stable inflation numbers, anxiety that the price level will leap up is driving a search for the reasons it seems low. Today’s inflation is a bit lower than the average since 1914 of 3.2%…

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Jan 30, 2019

Sea Change at the Fed

Today’s Fed announcement keeping the Fed funds target range at 2.25% to 2.5% was more than simply leaving rates unchanged for the moment. Behind the headlines are changes in their expectations for inflation and the economy and adjustments in their operating procedures: The FOMC will be patient as it determines what future adjustments to the…

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Jun 12, 2018

Low Inflation isn’t Unusual

Fed watchers and bond holders worry that inflation could spike, tempting the Fed to boost rates much farther than the current half percentage point the market expects in the rest of 2018.  With the Federal Open Market Committee, the central bank’s policy makers, meeting today and tomorrow these concerns are front and center.  This morning’s…

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Mar 23, 2017

Rising Rates Arrive

Which of the figures below belong together?   It’s obvious, even if analogies aren’t your strong suit, that A is like C and B is like D.  A and C are not like B and D. The economic relevance of this simple visual exercise is this: At its March 2017 meeting, the Federal Open Market…

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Nov 30, 2015

Waiting for the Fed

The Fed’s policy makers, the FOMC, meet on December 15th and 16th and are widely expected to raise the target Fed funds rate for the first time since 2006.  The odds of a 25 bp increase in the target range to 25-50 bp is about 77% based on Fed Funds futures.  There are two key…

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Oct 20, 2015

The Fed and the Debt Ceiling

Two distractions creating uncertainty for the treasury market right now are the debt ceiling and who said what at the Fed. Both annoyances should fade away, one in a few weeks, the other possibly not until sometime in the first half of 2016. The debt ceiling law dates back to shortly before the Second World…

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Aug 4, 2014

Why So Many Worry About Inflation

Inflation fears are everywhere except in the data.  While the Fed keeps reminding us that the inflation rate is below their 2% target, analysts keep arguing that the Fed will be miss signs of inflation.  Any hint of rising prices anywhere – from the CPI to oil to the money supply – is highlighted while…

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Jun 22, 2014

Inflation Fears and the Fed

Last week’s Consumer Price Index (CPI) release spooked a few people with a month to month change of 0.4%, the largest since February 2013; food prices were up 0.7% and the CPI ex-food & energy up 0.3% with both rising the most since August, 2011.  To top it all, the twelve month change in the…

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