Redacted Version Of The February 2017 FOMC Statement

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Comments

• The FOMC holds, but deludes itself that it is still accommodative.
• The economy is growing well now, and in general, those who want to work can find work.
• Maybe policy should be tighter. The key question to me is whether lower leverage at the banks was a reason for ultra-loose policy.
• The change of the FOMC’s view is that inflation is higher. Equities are stable and bonds fall a little. Commodity prices rise and the dollar weakens.
• The FOMC says that any future change to policy is contingent on almost everything.

The global economy is growing, inflation is rising globally, the dollar is rising, and the 30-year Treasury has not moved all that much relative to all of that. My guess is that the FOMC could get the Fed funds rate up to 2% if they want to invert the yield curve. A rising dollar will slow the economy and inflation somewhat.

Aside from that, I am looking for what might blow up. Maybe some country borrowing too much in dollars? Tightening cycles almost always end with a bang.