Fed Mins ‘Dovish’, No Interest Rate Increases This Year and Into 2020

Fed Mins ‘Dovish’, No Interest Rate Increases This Year and Into 2020


FLASH: The majority of Fed officials last month believed that economic conditions would likely warrant keeping its Dovish monetary policy unchanged for the rest of this year.

Several officials said their view could shift in either direction based on incoming data, according to minutes of the meeting released Wednesday.

Weaker growth and lower inflation expectations could prompt the Fed to cut rates, while faster growth and rising inflation expectations could prompt it to resume raising rates.

The Fed at its 19-20 March meeting left its Key policy rate unchanged and trimmed its rate hikes outlook this year from 2 to None.

Shayne and I believe the Fed could start cutting rates later this year if the economy slows further.

President Trump says that he wants the Fed to start cutting rates.

Lawrence Kudlow, head of the President’s National Economic Council, said he favored reducing the Fed’s current rate by one-half percentage point to reverse mistakes the central bank made last year by boosting the rate too often.

In Y 2018 the Fed hiked its policy rate 4X, leaving it in December at a level of 2.25 – 2.5%.

President Trump criticized those rate hikes, blaming them for a plunge in the stock market in Q-4 of last year. He also has said the increases were unnecessary because inflation was tame even though unemployment had dropped to near 49-year lows

President Trump has announced his intention to nominate 2 political allies, 2012 GOP Presidential candidate and prominent businessman Herman Cain and economist Stephen Moore, for the 2 vacancies on the 7-member Fed board.

Mr. Moore in December wrote an opinion piece saying that Federal Reserve Chairman Jerome Powell and the other Fed officials should be fired for agreeing to the December rate hike.

President Trump’s move to put Messrs Moore and Cain on the Fed board have raised concerns that they could seriously damage the Fed’s political independence. But that is not likely.

The new minutes showed that Fed officials spent time discussing a slowdown in the economy that occurred late last year and carried into the early part of this year.

The minutes said that Fed officials believe “the recent softness likely reflected temporary factors” such as the federal government’s 35-day partial shutdown and the sharp drop in the stock market in December.

Fed officials said that consumer sentiment has improved since then, and officials expect consumer spending to rebound in coming months.

Wednesday, the major US stock market indexes finished at: DJIA +6.58 at 26157.16, NAS Comp +54.97 at 7964.24, S&P 500 +10.01 at 2888.21

Volume: Trade on the NYSE came in at 744-M/shares exchanged

  • NAS Comp +20.0% YTD
  • Russell 2000 +17.3% YTD
  • S&P 500 +15.2% YTD
  • DJIA +12.1% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish in here.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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