Fed Policy Taking New Dovish Turn. Rates Now Seen Steady
21 Years ago | March 24, 2019 9/30/23, 12:00 AM
John M. Bland, MBA, co-founder, Global- View.com
Fed Sends Pre-Emptively Dovish signalsOn Wednesday March 20, markets had been prepared for uneventful Fed policy decision. First No Rata change was as expected. However the Fed “dot Plots” removed their previous forecast for two rate hikes by the end of the year to no rate changes. One hike is still priced in for 2020. As expected, the Fed revised down its economic forecasts for the next few years. They also announced that it would slow the pace of the liquidation of balance sheet holdings stating in May and indicated that it would conclude the reduction in balance sheet holding of fixed income assets in September.
Fed Sends Pre-Emptively Dovish signals Despite the dovish posture of the Fed, Chair Powell is said the underlying economic fundamentals of the U.S. economy remain strong and the Fed sees the outlook as positive. He noted that financial conditions are more accommodative than a couple months ago. He noted that Europe and China have slowed substantially and may be a headwind to our economy. The Fed does not expect a recession in Europe. Tariffs may be a factor affecting Chinese growth but probably not the main factor.
As for Fed policy. Powell said that the US economy is strong and that we will pursue policies to keep it there. He Reiterated Fed will remain patient and he expects the economy to continue advance at a solid pace, but slower than 2018. Brexit and Trade talks pose risks to the outlook. Fed funds rates are now in the broad range of 'neutral'. Future policy will be patient, which means there is no need to rush to judgment. So expect a steady policy for the balance of 2019.
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GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium
Mon 25 Mar 2019
A 09:00 DE- IFO
Tue 26 Mar 2019
A 12:30 US- House Starts/Permits
A 12:30 US- Durable Goods
A 14:00 US- Consumer Confidence
Wed 27 Mar 2019
A 12:30 US/CA- Trade
A 16:00 US- EIA Crude
AA 18:00 US- Fed Decision
Thu 28 Mar 2019
A 12:30 US- Weekly Jobless
AA 12:30 US- GDP
Fri 29 Mar 2019
A 08:55 DE- Employment
AA 09:30 UK- GDP
AA 10:00 EZ- Flash HICP
A 12:30 US- Personal Income, Spending, Deflator
A 15:00 US- Final Univ of Michigan
Sun 31 Mar 2019
A EU/UK- Clocks move forward one hour
