Fed FOMC Thoughts (Nov 1 2023)

Our interpretation of statements made by Federal Reserve Bank Chairman Jerome Powell:

• Strong and resilient U.S. economy
• Strong labor situation
• Fears of recession on the horizon
• Inflation persistently higher
• Near 8% U.S. residential mortgage rates
• The Fed has not made any decisions on future rates.
• No recession was put into the Fed's baseline forecast.
• Financial conditions have clearly tightened for business and consumer borrowing and spending.
• The committee (FOMC) is not thinking about rate cuts, they are asking whether they should hike more.
• The committee is focused on whether rates are high (monetary policy sufficiently restrictive) to bring inflation back to 2%
• We will keep rates higher until we are convinced inflation is sustainably under control, under 2%.
• Plenty of risk in the U.S. economy due to external and political impacts.
• We have seen significant progress in tightening monetary policy while still seeing economic growth and labor market strength, without significant negative effects (e.g., a recession).

The Fed is not relying on private actions:
​Tighter financial conditions driven by private action would need to be persistent and material, and independent of Fed / global central bank actions.