Powell Day
Pencils and pens ready?
Well, it’s here. Wednesday and Fed Chair Jerome Powell is set to flip, flop and fly his way into your space briefly today, according to the Fed’s top lap boy and leak-dropper Nick Timiraos.
It’s the commode stool version. Will they or won’t they get off of it or continue to just sit there.
Apparently, most of the chips are on their just sitting there. Expect more Fed palaver Powell is notable for and not much else.
“On the eve of Wednesday’s Federal Reserve decision, traders, economists and central-bank watchers across Wall Street are fixated on a single, perplexing question: Will the median of 19 policymakers project one or two rate cuts in 2025?
“The amount of attention on the Fed’s “dot plot” partly reflects the lack of suspense for a meeting at which interest rates are widely expected to be left alone.
“Still, the focus borders on the absurd given the high degree of uncertainty behind the economic forecast upon which officials build these quarterly interest-rate projections. It illustrates why some officials are ready to give the exercise a rethink.
“The Fed releases a dot plot at every other meeting. Each dot on a matrix grid represents one official’s rate projection for the end of the year under appropriate interest-rate policy.
“Whether the median of those dots shows one cut or two might matter enormously to markets. But 2024 illustrated that the zealous attention placed on small shifts in the median rate projection isn’t always a useful guide to the economic outlook or the Fed’s reaction to incoming data.
“Consider: At the Fed’s June 2024 meeting, the median interest-rate projection for the year moved to a single, quarter-point cut, down from three in March 2024. The Fed subsequently proceeded to deliver 1 percentage point in rate cuts beginning in September, with a half-point rate cut at that meeting.
Note: Chart shows Fed officials’ projections for the midpoint of the target range at the end of 2025.
Source: Federal Reserve
“This past March’s fairly narrow distribution—four officials penciled in zero cuts; another four put down one; nine wrote down two cuts; and two of them projected three cuts—left the median projection at two cuts. The median could drop to one from two if just a couple of officials revise in that direction this week.” More