Hawkish Statements - Which FOMC meeting? - Last Call - Punch Bowl empty

[kmiklas]

At which FOMC meeting will the Fed make its first hawkish statements regarding Fed fund rate increases and/or tapering of QE? [1]

In case you didn't know, the Fed is pouring hundreds of billions into the markets every month. [2]

It is creating irrational market behaviour, making the Laws of economics to appear irrelevant, and giving me personally a certain amount of agita.

These policies have an utterly profound effect on markets.

References:

1. https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm

2. https://www.spglobal.com/marketinte...conomic-vaccination-goals-fall-short-63773209

Fed's monthly bond purchases endure as economic, vaccination goals fall short

Equity and fixed-income investors remain in the dark over when the Federal Reserve will taper its securities purchases, a potentially historic decision that could trigger a run-up in bond yields or a stock market crash, depending on how long the central bank waits to move.

At issue are $80 billion worth of Treasury securities and $40 billion worth of mortgage-backed securities the Fed will continue to buy each month until it decides to tighten its pandemic-induced, accommodative monetary policy.

The Fed has pledged not to even begin discussions of reducing these purchases until "substantial further progress" has been made on its employment and inflation goals. But Fed officials have been intentionally vague in setting the metrics for such progress, granting them flexibility in future policy plans. And with employment and inflation numbers still well below pre-pandemic levels, many analysts believe even a conversation about ratcheting down the Fed's bond purchases might not take place until 2022.

 

[Arnie]

This isn't your father's Fed.

Since 1977, the Federal Reserve has operated under a mandate from Congress to "promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates" — what is now commonly referred to as the Fed's "dual mandate." The idea that the Fed should pursue multiple goals can be traced back to at least the 1940s, however, with shifting emphasis on which objective should be paramount. That such a mandate may, at times, create tensions for monetary policy has long been recognized as well.

Add to that the other mandate to address "inequality" or "inequity" among people of color.
So what does the Fed do in the face of rising inflation?
My bet: they punt, because that will be the easiest political move. And make no mistake, the Fed is a political animal. So a little inflation becomes a lot. And then things really get out of hand. They start to raise rates and then people like Pelosi and Maxine Walker start raking the Fed over the coals for raising rates that disproportionately hurt Blacks, women and whatever other victim of the month at the time.
You will never see a move like you saw with Volker.

Federal Reserve Racial and Economic Equity Act

 

[Pricechange]

This isn't your father's Fed.

Since 1977, the Federal Reserve has operated under a mandate from Congress to "promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates" — what is now commonly referred to as the Fed's "dual mandate." The idea that the Fed should pursue multiple goals can be traced back to at least the 1940s, however, with shifting emphasis on which objective should be paramount. That such a mandate may, at times, create tensions for monetary policy has long been recognized as well.

Add to that the other mandate to address "inequality" or "inequity" among people of color.
So what does the Fed do in the face of rising inflation?
My bet: they punt, because that will be the easiest political move. And make no mistake, the Fed is a political animal. So a little inflation becomes a lot. And then things really get out of hand. They start to raise rates and then people like Pelosi and Maxine Walker start raking the Fed over the coals for raising rates that disproportionately hurt Blacks, women and whatever other victim of the month at the time.
You will never see a move like you saw with Volker.

Federal Reserve Racial and Economic Equity Act

Agree. They punt because they mostly don't have a clue and they do the very easiest and most pleasing political move to the current administration and let the can get kicked to a later date to relieve headaches. Fed has never been very intelligent since Volker and probably never will again. Inflation will get out of hand and they will jump to each fire with a kick the can mentality. By the end of Biden's first term it will be too late to do any effect strategy. Biden has already said he will not run again next term, so he really doesn't care about anything except his current super stimulus programs and printing. So my answer to your FOMC meeting date is sometime after Biden first term.

 

[SunTrader]

Market will move faster than Fed giving them no choice but to react, sooner (EOY) rather than later - 3 years from now come on.

 

[Pricechange]

OMG...Yellen stepping in front of Powell. This is going to get VERY interesting. And yes, sun trader is correct. Its going to get interesting much faster than many had thought. But, will the Fed even hint of a change in current policy? Probably not. My guess is that the politics on the inside will cause internal bickering and even more decay in the trust of the ability of the Fed to actually manage this properly. The decay will probably extend to the Treasury and into Biden's overall ability to manage this inflation and heating. Biden should have disallowed this Yellen public commentary before it happened. Treasury does not set rates. Very bad look here.