The Fed chair’s high-profile speech emphasized the central bank’s focus on taming inflation.
High-quality fixed-income assets may offer the best return potential in more than a decade along with diversification benefits as a likely recession approaches.
Debt-financed fiscal policy is driving much of today’s high inflation, but as pandemic-era measures fade, central banks will likely return to their key role in managing price levels.
The first few years of the 2020s have seen a number of acute economic, financial, and geopolitical disruptions on a worldwide scale, and it will take time for the ultimate consequences of these shocks to be fully felt.
Bond markets are pricing in additional Federal Reserve interest rate hikes, acknowledging the central bank’s emphatic resolve to tame inflation despite the likely trade-offs.
Going into Federal Reserve Chair Janet Yellen’s 32nd and final meeting, neither we nor the markets expected the Fed to make much news. Of note, however, in its statement after the meeting on 31 January, the Fed acknowledged recent firmer economic data and expressed confidence in inflation moving toward the 2% target later this year.
Despite a rate hike, monetary policy remains accommodative.
President Trump has announced Fed Governor Jerome Powell as his nominee for Chair of the Federal Reserve Board. A Fed governor since 2012, Powell has been confirmed twice by the U.S. Senate and likely will be confirmed as chair without controversy in time to take over when current Chair Janet Yellen’s term expires in February 2018.
One could argue that this latest statement came in on the dovish side. But a broader read rapidly dispels that notion.
A global factor helps explain why central bank policies often tend to be correlated across countries.
Going into today’s important Federal Reserve meeting (with a press conference and an update to the economic projections, aka the “dot plot,” along with the usual statement), we at PIMCO along with most market participants expected the Fed to announce formally the start of balance sheet reduction this fall, perhaps in October. And that’s exactly what the Federal Open Market Committee (FOMC) did.
Federal Reserve Chair Janet Yellen’s remarks at the annual Jackson Hole Economic Policy Symposium delved into history but offered few clues about the future course of Fed policy.
The news coming out of the July Federal Open Market Committee (FOMC) meeting was a reference in the statement that the Federal Reserve expected to begin to implement its balance sheet normalization program “relatively soon,” which we (along with many market participants) took to mean at the upcoming September meeting.
The Federal Reserve is likely to begin normalizing its balance sheet in 2017. Why hasn’t this news rattled the bond market?
The Federal Reserve hiked rates as expected at its meeting on 13–14 June 2017, and it made news by providing important details about its plans to normalize its balance sheet. However, one crucial detail the Fed did not provide: when it will commence that process of balance sheet normalization.
With the probability of recession sometime in the next five years around 70% in our view, now may be a critical time to prepare for when the cyclical tailwind that began last year begins to fade. Over the next five years, the global economy may undergo five significant pivots in the direction and scope of monetary, fiscal, trade, geopolitical and exchange rate policies. Are investors too optimistic about the future economy? We address this and other crucial questions in PIMCO’s 2017 Secular Outlook – our long-term view for the global economy and markets.
The minutes of the May Federal Open Market Committee (FOMC) meeting, released Wednesday, provided (as expected) more information on the committee’s thinking about how and when to start the policy of normalizing the size of the Federal Reserve’s balance sheet.
The way in which the Fed normalizes its balance sheet will have important implications for markets.
The Federal Reserve faces three complications to removing monetary policy accommodation.
Although there was no drama in the Federal Reserve’s decision today to remove 25 basis points of accommodation (also known as a policy rate hike), there was a surprising – and laudable – amount of substance in the changes to the accompanying Fed statement.
With Federal Reserve Chair Janet Yellen on Capitol Hill for two days of testimony last week, plus Vice Chairman Stanley Fischer’s interview on Bloomberg TV, plus the upside surprise on U.S. CPI inflation data released on 15 February, the minutes...
Many had not expected the minutes of the 14 December 2016 Federal Reserve meeting released this afternoon to make much news.
Policymakers may have to juggle a rising dollar, higher yields and a lag in any Trump stimulus.
While most observers had expected correctly that the Federal Reserve would hike interest rates by 25 basis points today – markets had priced in literally a 100% chance – they did not think the Federal Open Market Committee (FOMC) would materially change its September projection for two hikes in 2017.
The minutes reveal a committee that had expected to hike at the meeting on December 13-14. Developments since could only have strengthened the case.
Last month, when the minutes from the Federal Open Market Committee (FOMC) meeting in September were released, they revealed that the decision not to hike the policy rate was a close call.