Montecfo
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Those are all interesting in theory and logical. But the Fed's hike plan does just what I said, leaves rates at 3.8 percent by end of 2024. Dovish with inflation north of 9%.1. The FED has announced its planned interest rate hike and has done them according to schedule. That is the plan and no other has been announced.
2. The door has been opened to an August rate hike if deemed necessary.
3. QT has commenced and the FED has started rolling off MBS's (when they are paid off) and treasuries (when they mature). The FED has NOT started selling bonds or MBS's yet, but have the option. QT will kill inflation quickly as that pulls liquidity directly out of the economy.
4. The FED is looking for a "soft landing" type recession and we will have an landing, for sure, as inflation is deadly to the economy.
5. Powell's legacy is at risk as he doesn't want be remembered as the guy who let inflation kill the U.S. economy and potentially lose reserve status of the currency.
6. Dem's don't want to be in office if inflation kills the economy. Instructions have been forwarded to Powell already.[emoji23]
There is nothing DOVISH going on now.
Powell's statement that future hikes would likely be less than 75 points. Why say this? Dovish.
As you said, Powell wants to engineer a soft landing. I do not disagree but to do so requires dovish tactics. Which are the tactics we are seeing, go slow, keep hikes low relative to inflation.
Powell declared the Fed funds rate had reached a "neutral" setting, which many economists criticized as not accurate given the inflation situation. Again, dovish.
I could go on. His rhetoric has been hawkish, actions mostly dovish. Now his rhetoric is ALSO dovish. That really concerns me.
Perhaps he knows something we don't. But Fed tactics this entire cycle going back to the pandemic suggest quite the opposite. And Congress keeps goosing spending which fuels inflation. He should consider the fiscal side also.
I hope he the economy either slows more or he adjusts his tactics, or this could become a long slog, like the Fed under Arthur Burns.
With interest rates still low and QT underway, he has a lot of tools and I agree caution is in order. But he should be making strong talk and actions at this point.