FOMC notes and updated indicators (2022 09 21)

FOMC NOTES*

  • Fed’s third straight 75 basis-point-hike drove “a much more hawkish dot plot that showed 125 more basis points of hikes this year” (so a potential fourth 75-basis-point increase in November) and a terminal rate of 4.6%
  • Policymakers substantially revised other economic projections and now see growth at just 0.2% this year, down from the 1.7% forecast in June. They now see the unemployment rate rising to 4.4% next year and inflation not falling to 2% until 2025
  • Chair Powell, “my main message has not changed at all since Jackson Hole” (recall: “historical record cautions strongly against prematurely loosening policy”) and “our job is to deliver price stability…central bankers see that as a precursor for health in the rest of the economy”
  • Powell said growth will need to be below trend for a while, and labor markets will need to soften, but he refrained from being too forceful on the subject of economic pain. Delays in restoring price stability could bring “more pain”

OTHER INDICATORS:

  • The Bloomberg Dollar Spot Index climbed to a record high
  • The yield on 10-year Treasuries advanced 12 basis points to 3.65%
  • US Leading Economic Index (LEI) fell 0.3% in Aug., vs. est. -0.1% (six-month annualized LEI narrowed to -5.3%)
  • US asking rents rose in August by the slowest pace in a year, a sign the hot rental market could finally be cooling, according to real estate brokerage Redfin. The national median asking rent rose 11% year-over-year to a record high of $2,039
  • Mortgage rates in US advance to 6.29% – the highest since October 2008

* source for many of these notes Stifel Economics

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