As Expected, Powell Punts
Jay Powell Missed The Moment In May, Repeats For June
Jay Powell and the Federal Open Market Committee once more lived down to expectations by leaving the federal funds rate unchanged for the umpteenth month in a row.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
This caught absolutely no one off guard, as Wall Street had priced in no change in the federal funds rate days ago. By yesterday, CME Group’s FedWatch Tool put the probability of the Fed standing pat at over 99.9%.
They were not wrong.
Readers already know my thoughts about the Fed's mismanagement of the federal funds rate in particular, but also of the Fed’s entire strategy on combating high inflation.
The best moment to trim the federal funds rate was at May’s FOMC meeting. This the Fed did not do, and now circumstances are likely to persuade the Fed not to act for the next few months.
Unemployed Americans are going to be the ones who pay for Powell’s incompetence.
Many of us have fantasied about ending the Fed for decades now. It’s not likely to happen, but Powell’s inaction feeds my fantasy anyway. Sure, the Fed’s employees are analyzing data, but when they make no rate changes for months on end, they give the impression to the American public of being useless do-nothings. Who need them, thinks the man on the street. Maybe we can just get rid of them, thinks the congressman. Do it, end the Fed, cries Rand Paul. And so my fantasy continues…
We the People have always been so worried that managing the fiat currency would be poisoned by politics, that we tried to insulate the Fed from oversight.
And in so doing, We forgot to "check and balance" it from the Statists that have captured it.
Now, it is just another tool in the State's undeclared war on the People.