Fed On Pause – For Now


Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.

Fed Statement, June 25

After 7 consecutive cuts in the Fed Funds rate from 5.25% down to 2% over the last 7-8 months, the Fed paused at 2% today.

I think this is pretty much a non-event in so far as this is almost exactly what markets had already priced in.  If anything, markets might have been expecting a little more hawkishness on inflation in the statement, in light of all the jawboning Fed officials have been doing on the dollar and inflation of late.

I think the Fed, along with the entire investment community, is pretty much in wait and see mode and consequently I don’t expect too much action in markets for the foreseeable future.  There will be a next phase but for now it’s back to the waiting game.

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