Well covered in Part 1, here, the FOMC (Federal Open Market Committee) and Capital Markets also believe currently that interest rates will stay low for longer …. maybe we are hopeful they are both wrong (No maybe, we are!) but there is one word that we know the FOMC cannot allow to get out of control …
Inflation !
With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent.
From FOMC statement September 16, 2020
Here is a great post from earlier on Dallas Fed calculated Trimmed Mean Inflation Measure, the FOMC’s favorite!
Triple the Bazooka – Who Let the Money Out!
During the 07-09 Great Financial Crisis, the FOMC then lead by Ben Bernanke, used the Feds balance sheet to purchase assets in order to lower rates, increase asset prices and calm markets….
This was unprecedented at the time….. Not today!
The current Bazooka is three times more ALREADY and will most certainly continue to grow in size and stimulus !
What if eventually the economy takes hold, and springs back to life –
Here is the traditional measure of inflation, Consumer Price Index from the BLS (Bureau of Labor Statistics) – again we like the afore mentioned Trimmed Mean and so does the FOMC!
Not to worry, we will be watching that 2ish % level closely…..
Inflation may occur, forcing the Feds hand at higher rates — time will tell!
Have a Great “FOMC and Interest Rates Part 2 Conclusion” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
Get Ready for Some Possibly Very Positive Macro Economic Reports …. The Year Over Year Comparison
In some ways it seems like an eternity…. in others it seems like a weird dream …. and in others it seems like only yesterday we started with a shutdown of the US Economy to thwart the spread of Covid….
Fast forward to today and we are almost exactly one year to the day when direct Economic Effects began ….
Get Ready For Some Crazy Macro Reports
Many, but not all Economic reports are Year over Year comparisons…
Imagine as we compare reports to an almost shut down economy, especially just in the very near term… to a much more robust, but of course not at full capacity Economy?
Here is the GDP from Fred (Federal Reserve St. Louis) – A rather slower moving Economic Measurement
Today, the United States Bureau of Labor Statistics Reported the most recent CPI number… here
This is February 2020 to February 2021 – likely to look much different next month!
Over the next few quarters many Economic numbers may have some really jaw dropping changes… just be aware it is likely better to use month over month comparisons if possible for a better measure.
We bet we will all see some pretty interesting Headline Reported numbers though!
Have a Great “Crazy Economic Report Watch” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
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Posted in Economy, Investing/Financial Planning, Market Comments
Tagged BLS, economic growth, Economic Reports, Year over Year