As anticipated, the Fed voted to keep their Overnight Rate unchanged at 3.5%-3.75%. Though the media reports that it was a unanimous decision, there were two voting members who did want to see interest rates drop. In fact, 15 of the 19 Federal Open Market Committee members believe that the Fed Funds Rate is currently above neutral–meaning that they believe higher rates are not helping the economy and they are simply waiting for the right time to pull the trigger. Or maybe the right leader to help them pull the trigger.
Jerome Powell did say that we are still in a period of disinflation but not yet to the Fed’s 2% target according to official government reporting channels (though as I mentioned yesterday, private sources calculate a number that has already breached below the 2% threshold). When you work for the government though, you use their data. Though the labor market has slowed, unemployment remains relatively low at 4.4%. The nomenclature upgrade in economic growth from “moderate” to “solid pace” should help create additional jobs for those seeking full-time employment.
The Committee will take a “meeting by meeting” approach to use interest rates to regulate fiscal stability. The next meeting is March 18 and there’s a 13.4% likelihood of a 0.25% rate cut. That probability increases to 30% for the April 29 meeting, and, no surprise, there’s a 64% likelihood that the fed drops rates on June 17 once Jerome Powell is no longer Chair.
