Sifting through the Pile of Apparent Good News

It was expected to be a big week for economic news…and indeed it was. With little exception, the news turned out to be quite favorable. Oddly, the markets aren’t cheering.

The Fed announcement on Wednesday afternoon offered little that investors hadn’t already anticipated. By unanimous vote, the overnight funds target range will remain at 1.50% to 1.75%. The updated “dot plot” indicates no rate change for next year with just four of 17 committee members believing a single hike will be warranted in 2020. Looking forward, the median Fed forecast suggests a quarter point increase for both 2021 and 2022. This clearly assumes no recession on the horizon. Keep in mind that although it’s nice to know what Fed officials believe their policy stance will be in two or three years, these rate projections seldom come to pass.

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