Stock and bond prices have been marking time over the past couple of weeks, waiting for Fed Chair Jerome Powell to speak tomorrow at 10 a.m. at the Jackson Hole Symposium. Meanwhile, today's batch of economic indicators supports our view that a Fed rate cut may not be warranted at the September 16-17 meeting of the FOMC if the other indicators released in the coming days also confirm that the economy doesn't need lower interest rates.
The July FOMC minutes released yesterday explained why all but two of the committee's members voted to leave the federal funds rate unchanged. We expect they will offer similar explanations for the same decision at their September meeting:
- "In their discussion of inflation, many participants observed that overall inflation remained somewhat above the Committee's 2 percent longer-run goal."
- "In their discussion of the labor market, participants observed that the unemployment rate remained low and that employment was at or near estimates of maximum employment. Several participants noted that the low and stable unemployment rate reflected a combination of low hiring and low layoffs."
- "In their discussion of financial stability, participants who commented noted vulnerabilities to the financial system that they assessed warranted monitoring. Several participants noted concerns about elevated asset valuation pressures."
Consider the following batch of indicators released today:
