The Fed just concluded its latest 2-day FOMC meeting. Here’s the reaction in Gold & Silver, Powell’s press conference, and more…
(by Half Dollar) The Fed just concluded its latest 2-day FOMC meeting.
Of course, market participants sure have been certain of the Fed lately, including this very morning:
It must be nice to have such certainty, mustn’t it?
Regardless, here’s Gold & Silver the minute the Fed’s statement “hit the tape”:
It’s kind of hard to force the obligatory “selling” when the statement, pasted below in its entirety, literally says the fed wants inflation to “moderately exceed 2 percent for some time“.
Still, it is very early, so a “meh” knee-jerk reaction in gold & silver might not be all of today’s “market” reaction as Powell steps up to the plate for some good old-fashioned mainstream financial press slow pitch softball.
Indeed, Jerome Powell will be holding a press conference at 2:30 p.m. EST, which can be seen here (live-stream is from CNBC since they’re more on the ball today than the Fed, which doesn’t even have the press conference set to premier on YouTube):
Watch the presser if, of course, you can stomach it.
The statement, from the Fed (bold added for emphasis):
The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.
The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have picked up in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.
The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Loretta J. Mester; and Randal K. Quarles.
Voting against the action were Robert S. Kaplan, who expects that it will be appropriate to maintain the current target range until the Committee is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals as articulated in its new policy strategy statement, but prefers that the Committee retain greater policy rate flexibility beyond that point; and Neel Kashkari, who prefers that the Committee to indicate that it expects to maintain the current target range until core inflation has reached 2 percent on a sustained basis.
Finally, what I wrote this morning in the Midweek Market Report for SD Bullion has a lot to say about fiscal and monetary policy (no linky because Google and the various Deep State players don’t like that all too much, you know):
There are two types of policies that have direct and indirect impacts on the economy and the markets, the first being “fiscal” policy, as in, the government’s financial policy, and the second being “monetary” policy, as in, the central bank’s financial policy.
On the Federal government’s fiscal side of things, we’ve had legislation like the CARES Act, which brought about a whole range of fresh government spending, including PPP loans to businesses and Economic Impact Payments to individuals and families. I have been looking for the fourth round of fresh government spending to have already begun by now, or, at the very latest, to be implemented in some form or another by the end of September, and so far I have been wrong. I still do think that some type of legislation and/or agreement will be made, however, and some sort of fresh government spending will occur in the remaining two weeks of the Federal government’s fiscal year, for two reasons.
First, we know that back in July, Treasury Secretary Steve Mnuchin said how President Trump wanted to get direct payments to individuals and families in August, meaning Congress could pass legislation, and President Trump would sign it to get the money out to the American public. Secondly, the US Treasury, according to its most recent Daily Treasury Statement, dated Monday, September 14, has an operating balance of nearly $1.6 trillion, and while I don’t pretend to know how much of that balance is already destined to go to a certain department or program, wouldn’t it be safe to say that certainly, at least a portion of the gigantic cash balance could go to Cares 4.0 to be spent before the end of the fiscal year?
Nonetheless, I’ve been wrong about the fiscal side of things, and, just yesterday, various House Chairs from various Congressional committees released a statement explaining the reason for the ongoing stalemate, for lack of a better term. In reading the statement, it’s pretty clear the stalemate comes down to partisan politics with both sides unable to agree on how much should be spent and on what.
Now that the fiscal side of things is temporarily on hold, all eyes are turning to the Fed and its monetary policy. In fact, today, at 2:00 p.m. EST, the Fed will conclude its 2-Day September Federal Open Markets Committee (FOMC) meeting and release a statement about the markets and the economy in general, and employment and price stability (inflation) specifically. This is also when the Fed decides to hold interest rates, the “Fed Funds Rate”, steady, to cut interest rates, or to hike interest rates. It is not that the Fed is only able to make interest rate decisions during its FOMC meetings only, but in general, it is during these FOMC meetings in which the Fed announces changes to interest rates and other things as they pertain to monetary policy.
Fed Chair Jerome Powell holds a press conference at 2:30 p.m. EST. He reads the Fed’s statement and takes some questions from reporters of various mainstream news networks. The conferences of late have been virtual, but no matter whether today’s press conference is virtual, yet again, or whether the presser is in person, Powell will surely be asked, either directly or indirectly, for his assessment of the current fiscal side of things and what it means for the markets and the economy.
The press conference today is arguably more important than the statement because the markets are pretty much certain of what the Fed will and won’t announce, especially when it comes to interest rates.