Mr. Powell doesn’t mind having that stigma. At the conclusion of this Wednesday’s FOMC meeting, Chair Jerome Powell let it be known that the Fed isn’t necessarily finished raising rates, and they will do everything in their power to ensure that the overall inflation rate in the United States drops to their 2.0% target rate as soon as possible. This may lead to a considerable slowdown in the labor market as companies seek to reduce expenses to offset the carrying cost of interest payments. Jay says that’s A-OK.
Signs of renewed increases of inflation have popped up this last month, and Mr. Powell and his entourage have made their dissatisfaction with these unwanted insights abundantly clear. Based on various key note addresses as well as the press conference at the end of this week’s meeting, the former goal of a soft economic landing no longer seems to be a feasible priority of the Open Market Committee. We could be headed for a prolonged period of economic turmoil; the signs have been pointing that direction now for over a year.
Due to their heightened interaction that’s consequently shaped the financial markets these last few years, we place a lot of emphasis on the Fed and speak as if they are in control of the key economic indicators that give understanding to the direction of our economy. In reality, the entire world’s activities control the financial markets and our Fed does what it can to try to steer the ship in what it believes is the right direction. In lieu of a rate hike this week, we got a stern warning and a reminder that the pain we are currently feeling and that may lie ahead is to improve the broader health of a balanced U.S. economy for the longer-term.
What all that means is that it’s not going to get any cheaper to buy a home anytime soon.