U.S. Federal Reserve (Fed) Meeting Minutes
And in another tweet on Tuesday, he encouraged the Fed to read a the Fed's monetary policymaking body, has a meeting this week and is. The next FOMC meeting is in: 25 Learn more about Fed Fund futures and options, which reflect market insight on future Federal Reserve's monetary policy. Fed leaders are meeting this week following a volatile few months on Wall Street. On Wednesday, Fed Chair Jerome Powell is expected to.
What to expect from the Fed today - CNN
Inflation, watched closely by the Fed, may be weakening. A Reuters poll on Friday showed economists marking up the probability of a U. They now expect the Fed to both pare its three anticipated rate increases for next year to two or even fewer. More hikes may well be necessary in a growing economy with unemployment at a year low. Some policymakers remain concerned that a scarcity of workers will bid up wages and lead to more quickly rising prices that the Fed needs to head off.
But until that becomes clearer, analysts, investors and Fed officials seem in agreement that Fed Chairman Jerome Powell wants to be as unshackled as possible to respond to events. A Fed signal that its rate hike cycle is ending would be cheered by home buyers, corporate debt managers, stock markets and others eager for borrowing costs to stay low.
It would be welcomed by U. The two-day policy-setting meeting comes a day after Americans vote in the midterm elections. Democrats retook control of the House -- a widely expected development that likely guarantees two years of gridlock in Washington and an array of fresh investigations into the Trump administration. Fresh economic data since central bankers' last meeting has increased the chances of the Fed sticking with its plans to raise rates in December, and continue on its path of hiking interest rates gradually in Read More Employers addedjobs in Octobereasily surpassing expectations, and wages also grew a healthy 3.
But not everything is rosy. US policy makers are also contending with a strengthening dollar as interest rates rise and more recent market volatility just as other central banks take steps to end crisis-era stimulus programs.
Board of Governors of the Federal Reserve System
A chart of the sectoral balance flows is presented below: Businesses and households are saving overall, and net financial assets in the private sector such as stocks, bonds, and real estate can grow in value. Overall, there is more currency added to the money supply than removed and additional dollars grow the economy.
Most of the newly minted dollars flow overseas to the external sector in return for the real benefit of goods and services by way of the current account. These tend to be held as US Treasury deposits. The size of the money supply remains the same, and it is the ownership of the money supply that changes.
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Recessions normally occur when the private sector balance is zero or negative. This has not happened yet. The table below shows how the sectoral balances looked at the peaks and troughs of the last two recessions. Strong private credit growth can cover the private sector deficit and sustain aggregate demand where: Forecast based on existing flow rates Recessions normally occur after the interest rate inverts; this means the FFR is more than the year bond rate.
This too has not happened yet but is on a collision course to do so. The most likely scenario is that the long end of the yield curve moves down into and through the low end. The current state of credit creation and sectoral flows are shown in the table below and more detail can be read here in this recent article focusing on this subject.
Forecast based on existing flow rates Summary, Conclusion, And Recommendation Each movement of the FFR upwards moves the economy towards the greatly feared yield curve inversion where the short end of the curve is greater than the long end. Historically, a recession has followed each time this has happened after twelve to eighteen months after the inversion.
The important point with the yield curve inversion is that the damage to the economy is being done in the lead up to the inversion. That means right now. The inversion itself is the final stage of a growing problem like cancer that finally destroys something vital in the body. The concept is based on the following economic relationships developed by Professor Steve Keen: Employment rate - Employment will rise if economic growth exceeds the sum of population and labor productivity growth. Wages' share of GDP: The wages' share of output will rise if the wage rise exceeds the growth in labor productivity.
Private debt to GDP ratio: The debt ratio will rise if the rate of growth of debt exceeds the rate of growth of GDP. What is happening as rates rise is that a higher share of GDP goes to bankers and a lower share to wages and business. The wages' share of GDP is particularly hard hit as more and more income is devoted to debt service instead of the purchase of real goods and services.
The following chart shows this process visually. The bottom line is that the compounding rate of growth of the private debt goes beyond the capacity of the real economy to carry it which then triggers Professor Hudson's golden rule that debts that cannot be paid will not be paid. This is a symptom of our finance-dominated economy where the economy has been made to serve finance instead of finance serving the economy.
The Fed is said to be independent of the national government, but it is not independent of the finance sector that controls it. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Seeking Alpha.
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