Fed Policy

Circumstances and Results Surrounding Previous Times When the Fed Raised Interest Rates in Increments Greater than a Quarter Percentage Point

April 10, 2022

The last federal funds rate hike to exceed 25 basis points was an increase in May 2000 that culminated a tightening cycle of 175 basis points over a period of eleven months that began in mid-1999. The cycle commenced with the perception of a heightened inflation risk. CPI inflation at the time was only 2.0%, […] More

Fresh Wave of Risk Aversion

October 26, 2018

Investors will get their first peak at U.S. third-quarter GDP in less than an hour. Growth likely decelerated from the 4.2% pace in the second quarter but still probably managed to be at 3.0% or a bit above. But markets are reacting most keenly to the Federal Reserve officials’ disregard of President Trump’s criticism of […] More

Focus to Shift From Fed Watching to Data Combing

August 26, 2016

In the week just ending, financial market participants were consumed with today’s scheduled speech by Janet Yellen at the K.C. Fed-sponsored Jackson Hole central banking symposium. The Fed Chair made some news by reporting progress toward the Fed goal of 2% inflation as well as its jobs growth mandate had occurred, and that the case for […] More

Comments on U.S. Current Account, Consumer Prices, and Monetary Policy

June 18, 2015

Balance of payments data out today confirm a weakening that foreshadows the dollar’s correction downward since mid-March.  The $113.3 billion current account deficit in the first quarter was $10.2 billion wider than the prior quarter’s imbalance.  The deficit increased as well in each of the final two quarters of 2014, bringing the three-quarter cumulative deterioration […] More

U.S. Labor Market Still Not Firing on All Cylinders

October 22, 2013

After expanding by 208K per month between September 2012 and March 2013, non-farm payroll job growth slowed to 182K per month in the second quarter and 143K per month during the summer quadrant of the year.  Since the economic recovery began in mid-2009, there hasn’t been a decent summer yet from a labor market perspective.  […] More

Examining One Flawed Reason for the Fed Not to Ease Additionally

October 13, 2010

It is widely recognized that overly stimulative U.S. monetary policy in the 1960s and 1970s was a root cause of the high inflation that developed in the 1970s and 1980s.  Among those opposed to a second round of quantitative easing, a big concern is the fear of replicating that piece of history.  A quote in […] More