Fed

Can We Bank on Yellen & Powell?

Mar 22, 2023 3 min read

Stock prices fell after Fed Chair Jerome Powell's press conference today, which was actually relatively dovish. He said that inflation remains too high, but the banking crisis might force the Fed to pause tightening soon. Of greater concern to the stock market was that US Treasury Secretary Janet Yellen said at a congressional hearing this afternoon: “I have not considered or discussed anything having to do with blanket

Ed Yardeni

Fed Hawks Down!

Mar 22, 2023 1 min read

The FOMC raised the federal funds rate by 25bps to 4.75%-5.00%. The committee's statement reassuringly noted: "The U.S. banking system is sound and resilient." Nevertheless, the recent banking crisis undoubtedly turned Fed officials less hawkish. Fed Chair Jerome Powell in his post-meeting presser said that inflation remains too high, yet the median forecast of the federal funds rate in the FOMC'

Ed Yardeni

The Fed Has Done Enough

Mar 21, 2023 2 min read

The banking crisis might be equivalent to a 100bps hike in the federal funds rate. We are just guessing, but financial conditions have surely tightened a lot as a result of the SVB earthquake and its aftershocks. Further hikes in the federal funds rate are no longer necessary to get it into restrictive territory as Fed officials have been aiming to do since they started the latest monetary policy tightening

Ed Yardeni

The Fed Should Give It A Rest

Mar 20, 2023 1 min read paid

In his previous press conference on February 1, 2023, Fed Chair Jerome Powell mentioned the word “restrictive” 10 times. It was mentioned mostly in the same context as the following: “And we said that we continue to anticipate that ongoing increases in the [federal funds] target range will be appropriate in order to attain that stance of sufficiently restrictive monetary policy that will bring inflation down to 2%.”

Ed Yardeni

The Economic Week Ahead: March 20-24

Mar 19, 2023 2 min read

The FOMC always seems to take center stage in the financial markets these days, and will certainly do so on Wednesday, when the next two-day meeting of the FOMC will end around noon. It will be followed by the release of the FOMC's statement at 2:00 pm and Fed Chair Powell's presser at 2:30 pm. He should be less hawkish than he was during

Ed Yardeni

Inflation: Everything Everywhere But Less So

Mar 14, 2023 1 min read paid

And the Academy Award for the Biggest Economic Surprise of 2022 goes to . . . inflation. It has defied Fed expectations by being both transitory and persistent: Consumer goods inflation has been transitory, while consumer services inflation has been persistent. In any event, overall measures of consumer inflation continue to moderate. Consider the following: (1) The New York Fed’s consumer expectations survey was released on Monday with February’s results. It

Ed Yardeni

The Fed: Everything Everywhere All at Once

Mar 14, 2023 2 min read

Did the Fed just guarantee every bank deposit in America? That's really not the Fed's job; it's up to the FDIC to insure deposits up to a maximum of $250,000. By law, the Fed's job is to keep unemployment and inflation down. In addition to its legal "dual mandate," the Fed is ultimately responsible for maintaining financial stability. Our

Ed Yardeni

Disintermediation: New Problem For The Fed

Mar 10, 2023 2 min read

Yesterday's sell-off in the stock market was led by bank stocks. It was mostly triggered by fears that SVB may be the start of a financial crisis that leads to an economy-wide credit crunch and recession. As it has done often in the past, the inverted yield curve has been signaling since last summer that something could break in the financial system if the Fed continues to tighten

Ed Yardeni

Thus Spake The Fed Chair

Mar 7, 2023 2 min read paid

Fed Chair Jerome Powell is the high priest of monetary policy. His pontifications are carefully read and analyzed by his followers. We are among his followers because we are Fed watchers. Indeed, we often count how many times certain words appear in his public remarks. The word “disinflation” was uttered 11 times at Powell’s press conference on February 1. He was the only one who mentioned the word at

Ed Yardeni

The Fed Chair Testifies Before Congress

Mar 6, 2023 1 min read paid

Tomorrow (Mar. 7) and the day after (Mar. 8), Fed Chair Jerome Powell will testify in hearings before the Senate Banking Committee and the House Financial Services panel respectively, to discuss the bank’s latest semiannual Monetary Policy Report (MPR). The report was released on Friday. It reaffirmed the Fed’s commitment to bring inflation back down to 2% by 2025, according to the FOMC's December Summary of

Ed Yardeni

The Rent Is Too Damn High!

Feb 27, 2023 1 min read paid

As a result of the pandemic, the demand for single-family homes soared, and so did their prices. Rising mortgage rates last year clobbered affordability for first-time homebuyers, forcing them to rent. So tenant rent inflation soared from about 2.0% y/y in early 2021 to 8.6% in the CPI during January of this year (chart). Rising mortgage rates also reduced the supply of homes. Since many homes have

Ed Yardeni

Inflation Still Too High But Gliding Down

Feb 14, 2023 2 min read paid

January’s CPI release today showed that inflation is continuing to moderate, though perhaps more slowly than it did during the second half of 2022. The headline and core CPI rose 6.4% y/y and 5.6% through January down from 6.5% and 5.7% during December (chart). The CPI for all consumer goods rose 4.5% y/y in January, down from 4.8% in December and

Ed Yardeni

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