The Fed Has No Idea What’s Coming Next
We will let you know what we are doing once we know what we are doing
was the message from the Federal Reserve statement and Chair Powell’s press conference that followed.
The Fed, as widely expected did raise their short-term rate, known as the fed funds rate, by .25% to a range of 0.25% to 0.50%.
This was the first increase since 2018.
Along with the statement FOMC (Federal Open Market Committee) participants also released their Summary of Economic Projections.
This gave an indication of where the committee members view economic indicators going forward.
FOMC Summary of Economic Projections
There are a few of the FOMC projections that we want to point out in the table below.
- The first is that the FOMC participants are now projecting U.S. GDP growth this year of 2.8% vs a projection of 4.0% at their December meeting.
- The next is the higher inflation projection – which isn’t a surprise that they increased it. However, we want to point it out because it is key to the discussion below, and the last is the increase in the fed funds rate projection.
- This projection represents where the committee members project the fed funds rate to be at the end of 2022, which currently stands at 1.9% vs 0.9% at the recent December meeting.
Why the US Dollar is Doomed
(Click on image to enlarge)
The first of these is the revised down U.S. GDP projection, as Chair Powell pointed out 2.8% is still a solid GDP projection.
To put it in perspective – real GDP growth averaged 2.25% from 2010. After the Great Financial Crisis, through 2019, before the start of widespread Covid-lockdowns wreaked havoc on economies.
Disclosure: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation ...
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