Monetary Policy

Powell & Co. Remain Dovish

Mar 20, 2024 3 min read

Powell & Co. were more dovish today than we (and stock investors) expected. The FOMC's Summary of Economic Projections (SEP) still implied three 25bps cuts in the federal funds rate (FFR) this year (table). That's the same projection as in December's SEP even though the median forecast was raised for real GDP growth (to 2.1% from 1.4%) and the core PCE inflation

Ed Yardeni

The Urge To Merge

Jul 26, 2023 2 min read paid

When the banking crisis occurred during March, we concluded that the Fed's emergency liquidity response would contain the problem. We predicted that investors soon would be scrambling to determine which regional banks might be acquired rather than worrying about which of them might be seized by banking regulators. We argued that the higher costs of regulation that would soon be imposed on the smaller banks would force the

Ed Yardeni

What's the Matter with China?

May 23, 2023 2 min read paid

The People’s Bank of China (PBOC) stands out among the major central banks. It is the only one that has been continuing to provide additional monetary policy stimulus. This suggests that China’s economy isn’t performing as well as the government would like to see. The PBOC’s reserve requirement ratio for commercial banks has been lowered three times since the start of 2022. Over the past 12

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

Fed May Be Dialing Back On Hawkish Squawking

Oct 22, 2022 2 min read

The S&P 500 rallied 2.37% to 3,752.75 on Friday as the 2-year US Treasury note yield fell to 4.50% from 4.61% on Thursday (chart). The happy day's performance was sparked by Friday's WSJ article titled "Fed Set to Raise Rates by 0.75 Point and Debate Size of Future Hikes." It was written by the Journal'

Ed Yardeni

Another Awful Risk-Off Week

Sep 24, 2022 1 min read paid

The bad news for the stock market this past week actually started on September 16 in the morning after FedEx delivered a terrible preannouncement about the current quarter. The package delivery giant said in a statement the night before that it expects Q1 earnings, excluding some items, to be $3.44 per share, or roughly 33% below the average analyst estimate of $5.10. In addition, FedEx withdrew its earnings

Ed Yardeni

Fed Stays On Tightening Course

Sep 21, 2022 2 min read

The Fed lifted the federal funds rate range by 75bps to 3.00%-3.25%. Stocks sold off as Fed Chair Jerome Powell reiterated during his presser today the main points he made in his hawkish speech at Jackson Hole in late August. He stressed that monetary policy may have to be restrictive for a while to bring inflation down, and that the process may be painful. There wasn'

Ed Yardeni

The Chairman's Speech: What Will Jerome Powell Say?

Aug 24, 2022 2 min read

Have you heard? Fed Chair Jerome Powell will speak on Friday morning at the Federal Reserve Bank of Kansas City’s annual Economic Policy Symposium, which is held at a nice resort at Jackson Hole, Wyoming. Odds are he won't change his tune much from what he said in his prepared remarks at his July 27 presser, which was less than a month ago. Since then: July'

Ed Yardeni

Inflation Is Global & Local

Jul 1, 2022 2 min read

Inflation has soared around the world over the past year. At first, last spring, it was attributed to “transitory” supply-chain problems that have turned out not to be transitory but persistent. Then all last year, excessively stimulative US fiscal policy fueled a demand boom that worsened the global supply shock caused by the pandemic. Early this year, Russia’s invasion of Ukraine exacerbated energy and food inflation around the world.

Ed Yardeni

More Central Bank Tightening

Jun 9, 2022 1 min read paid

Don't fight the central banks when they are fighting inflation. Stock prices dropped today on news that the European Central Bank will end quantitative easing on July 1, then raise interest rates by 25bps on July 21. It will then hike again on September 8. At -0.5%, the ECB's deposit rate has been in negative territory since 2014. Unlike the Fed, the ECB remains committed

Ed Yardeni

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