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Fed Chair Jerome Powell

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Isgrimnur
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Fed Chair Jerome Powell

Post by Isgrimnur » Tue Feb 27, 2018 1:59 pm

WaPo
Jerome H. Powell, the new chairman of the Federal Reserve, made his debut public appearance Tuesday, where he told the House Financial Services Committee that he is committed to “clearly explaining” Fed thinking and that the U.S. economy is getting better. He said the recent stock market jitters don't worry him, and he reiterated that the Fed intends to raise interest rates at a slow and steady pace — similar to its moves under his predecessor, Janet L. Yellen.
...
Powell has one of the more difficult jobs in Washington right now. He has to keep Wall Street calm, unemployment low and inflation in check — all while facing pressure from Trump. While the Fed is an independent entity over which Trump has no direct control, Powell is a Trump nominee, and the president has made it clear he wants faster economic growth and a booming stock market.

On Tuesday, Republican lawmakers repeatedly tried to get Powell to say the tax cuts are boosting wages, which Powell refused to do. Democrats then tried to get him to say the cuts are adding to the debt and benefit only Wall Street shareholders, which Powell also would not weigh in on. He stressed that the goal of the most sweeping tax legislation in over 30 years is to get businesses to invest more and that it's too early to tell if that's happening.
...
The Fed chair tried to reassure lawmakers that he can walk that line between letting growth pick up after the Trump tax cuts, but not letting the economy get so hot that there's danger of a crash.
...
His comments suggest he still thinks the Fed should boost interest rates three times in 2018, although his optimism could perhaps open the door to the possibility of more rate increases. Wall Street traders and economists are overwhelmingly predicting a rate hike at the Fed's next meeting on March 21.
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Re: Fed Chair Jerome Powell

Post by LordMortis » Tue Feb 27, 2018 2:12 pm

Isgrimnur wrote:
Tue Feb 27, 2018 1:59 pm
While the Fed is an independent entity over which Trump has no direct control, Powell is a Trump nominee, and the president has made it clear he wants faster economic growth and a booming stock market.
and a larger portions of ice cream, and this thermos, and a puppy. Ok maybe he doesn't want a puppy.

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Re: Fed Chair Jerome Powell

Post by GreenGoo » Tue Feb 27, 2018 2:30 pm

LordMortis wrote:
Tue Feb 27, 2018 2:12 pm
Isgrimnur wrote:
Tue Feb 27, 2018 1:59 pm
While the Fed is an independent entity over which Trump has no direct control, Powell is a Trump nominee, and the president has made it clear he wants faster economic growth and a booming stock market.
and a larger portions of ice cream, and this thermos, and a puppy. Ok maybe he doesn't want a puppy.
Unlike other presidents, who want recessions, depressions and all sorts of transgressions.

Where is that stroke I was promised?

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Re: Fed Chair Jerome Powell

Post by Paingod » Tue Feb 27, 2018 4:00 pm

GreenGoo wrote:
Tue Feb 27, 2018 2:30 pm
Where is that stroke I was promised?
Unlike previously elected presidents, this one isn't going to stress out constantly, age 10 years for every 4 he's in office, or suffer any ill-effects from the position. He'd have to actually be governing the nation deliberately and care about the authority vested in him for that to happen.
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Re: Fed Chair Jerome Powell

Post by Kraken » Tue Feb 27, 2018 5:56 pm

The economy is entering uncharted territory. We're already in the second-longest expansion ever, and this summer it will become the longest. With the rest of the world also growing, there are no obvious threats in the headlights. Some economists are telling me that this could keep growing for decades, as some other countries have managed to do. There's noting automatic about recessions; we have to cause them somehow.

One economist foresees a 70% chance of a recession in 2020. The "uncharted" part is from applying massive deficit stimulus while the economy is already at full employment. In his view, that will inevitably force interest rates up, which further increases the deficit. The short-term stimulus from the tax and spending deficits starts to wear off in '20 so that's when the downside should hit. With interest rates still at relatively low levels and record deficits, there will be no room in monetary policy for recession-fighting.

Thing about "uncharted territory" is that nobody knows. There seems to be widespread agreement, though, that we're in the hands of the Fed.

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Re: Fed Chair Jerome Powell

Post by Isgrimnur » Tue Feb 27, 2018 6:10 pm

You've got rumblings of another housing crisis as only rich people can afford to buy, you've got un-/under- funded pensions risking to ravage communities, and you've got the student loan bubble, plus FSM-knows what else. It may be one of those, it may be all of the above, or maybe it's just a shooting war with the Norks to completely disrupt the supply of cheap electronics from East Asia.
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Re: Fed Chair Jerome Powell

Post by Max Peck » Tue Feb 27, 2018 9:50 pm

Paingod wrote:
Tue Feb 27, 2018 4:00 pm
GreenGoo wrote:
Tue Feb 27, 2018 2:30 pm
Where is that stroke I was promised?
Unlike previously elected presidents, this one isn't going to stress out constantly, age 10 years for every 4 he's in office, or suffer any ill-effects from the position. He'd have to actually be governing the nation deliberately and care about the authority vested in him for that to happen.
On the other hand he is in a constant state of rage because people are repeatedly treating him unfairly. Treasonously so. :coffee:
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Re: Fed Chair Jerome Powell

Post by Isgrimnur » Wed Sep 26, 2018 3:29 pm

Rate Hike
The Federal Reserve raised interest rates for the third time this year.

The decision, which was expected, is a sign of increased confidence in the US economy. Unemployment is low, economic growth is strong, and inflation is relatively stable.

Policymakers under Chairman Jerome Powell unanimously agreed to raise the federal funds rate a quarter percentage point, to a range of 2% to 2.25%. The rate helps determine rates for mortgages, credit cards and other consumer borrowing.
...
Central bankers raised expectations for a fourth rate hike in December, with a majority now in favor of such a move. In June, policymakers were split on whether the Fed should raise rates four times this year or three.

Looking ahead to 2019, Fed officials expect at least three rate hikes will be necessary.
...
The Fed raised its expectation for growth this year to 3.1% from 2.8%, reflecting strength in the second and current quarters.

But for 2019, Fed officials expect growth to slow to 2.5% amid worries about the growing trade rift between the United States and China. The revised estimate is slightly higher than what policy makers expected last quarter, at 2.4%.
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Re: Fed Chair Jerome Powell

Post by coopasonic » Wed Sep 26, 2018 3:37 pm

The fed rate is poised to surpass my mortgage rate. That amuses me.
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Re: Fed Chair Jerome Powell

Post by Isgrimnur » Thu Nov 29, 2018 2:55 pm

WaPo
Federal Reserve Chairman Jerome Powell cast a bright picture of the U.S. economy Wednesday and appeared to suggest that the Fed might consider a pause in its interest rate hikes next year to assess the impact of its credit tightening.

Powell’s comments ignited a huge rally on Wall Street, with the Dow Jones Industrial Average surging 617 points, its biggest one-day increase in eight months.

Referring to the Fed’s gradual increases in its benchmark rate, Powell said, “there is no preset policy path.” Rather, he said, the Fed will assess the most recent economic and financial data in deciding whether or how fast to keep raising rates.

Speaking to the Economic Club of New York, the chairman also suggested that interest rates appear to be just below the level the Fed calls “neutral,” where they are thought to neither stimulate growth nor impede it. That contrasted with a remark Powell made in October that the Fed’s policy rate was still a “long way from neutral.” His remark then had unsettled investors who feared it signaled that the Fed would continue raising rates well into the coming months.
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Re: Fed Chair Jerome Powell

Post by GreenGoo » Thu Nov 29, 2018 3:01 pm

Layman here.

I thought increased interest rates are to reduce borrowing and "cool off" the economy when it is in danger of overheating. A rosy outlook on the economy should imply future rate hikes, no?

I mean, in my simplistic understanding:

Doing too well = increase rates
Doing too not well = reduce rates
Doing "perfectly" = no action.

I guess that is what he's doing and saying. Rates no longer need to be increased because everything is awesome.

Feel free to correct anything I've said.

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Re: Fed Chair Jerome Powell

Post by LordMortis » Thu Nov 29, 2018 3:03 pm

Yeah, but that was yesterday.

https://www.cnbc.com/2018/11/29/stock-m ... focus.html
Stocks traded lower on Thursday as investors' hopes of a trade deal between China and the U.S. dimmed.

The Dow Jones Industrial Average fell 71 points, while the S&P 500 pulled back 0.3 percent. The Nasdaq Composite fell 0.4 percent.

The market fell to its low of the day — with the Dow dropping more than 160 points — after the South China Morning Post reported that White House advisor Peter Navarro would be attending the dinner between President Donald Trump and Chinese leader Xi Jinping in Buenos Aires at the G-20. CNBC later confirmed Navarro's attendance.
Maybe Powell is trying to save the market from our developing International Trade law.

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Re: Fed Chair Jerome Powell

Post by noxiousdog » Thu Nov 29, 2018 5:13 pm

GreenGoo wrote:
Thu Nov 29, 2018 3:01 pm
Layman here.

I thought increased interest rates are to reduce borrowing and "cool off" the economy when it is in danger of overheating. A rosy outlook on the economy should imply future rate hikes, no?

I mean, in my simplistic understanding:

Doing too well = increase rates
Doing too not well = reduce rates
Doing "perfectly" = no action.

I guess that is what he's doing and saying. Rates no longer need to be increased because everything is awesome.

Feel free to correct anything I've said.
That's generically true, but we are also attempting to return to a normal rate after the significant reductions after the last recession.
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Re: Fed Chair Jerome Powell

Post by GreenGoo » Thu Nov 29, 2018 5:31 pm

I mean this without facetiousness.

What's a normal rate?

What rate (or range of rates) would be considered normal?

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Re: Fed Chair Jerome Powell

Post by LordMortis » Thu Nov 29, 2018 5:45 pm

GreenGoo wrote:
Thu Nov 29, 2018 5:31 pm
I mean this without facetiousness.

What's a normal rate?

What rate (or range of rates) would be considered normal?

I had this thought not too long ago...

https://www.macrotrends.net/2015/fed-fu ... ical-chart

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Re: Fed Chair Jerome Powell

Post by GreenGoo » Thu Nov 29, 2018 5:48 pm

Look at that 3 year jump from 1977 to 1980. No wonder my parents almost got divorced. Ok not really (well, not to my knowledge) but I do remember lots of money talk around that time that I didn't pay attention to or understand.

Imagining that hitting me as an adult with a mortgage today...

*vomit*

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Re: Fed Chair Jerome Powell

Post by Isgrimnur » Thu Nov 29, 2018 6:24 pm

Yeah, Canadian mortgage practices are no joke. I much perfer knowing that my rate will remain at 4.25% until I'm 69, pay off the house, or move.
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Re: Fed Chair Jerome Powell

Post by Isgrimnur » Wed Dec 19, 2018 3:06 pm

Rate increase
The Federal Reserve raised short-term interest rates Wednesday, a widely expected move that President Trump has called “foolish” but the central bank felt was necessary to keep the U.S. economy thriving.

The Fed believes this rate increase will keep the economy from overheating, but the central bank downgraded its economic outlook for 2019 and indicated fewer rate hikes next year.

In September, the Fed predicted it would do three more interest rate hikes in 2019. Now the Fed predicts two hikes, a sign of more caution. Fed leaders also lowered their growth forecast for next year from 2.5 percent to 2.3 percent, a signal that headwinds are rising. The central bank said it was closely watching “global economic and financial market developments.”
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Re: Fed Chair Jerome Powell

Post by Eel Snave » Wed Dec 19, 2018 3:10 pm

Part of the problem is that without rate hikes there's no backstop in case things go bad. You can't lower the rates to spur the economy along if they're already at or near historic lows.
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Re: Fed Chair Jerome Powell

Post by hepcat » Wed Dec 19, 2018 3:47 pm

Friggin' Fed are all liberal democrats who are close personal friends with Mueller, were appointed by Obama and worked for the Clinton charity organization at one point!
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Re: Fed Chair Jerome Powell

Post by Fireball » Wed Dec 19, 2018 4:35 pm

I am very torn over these rate hikes.

On one hand, this expansion has to end at some point, and since Trump and the Republicans have fucked up our deficit to the point that fiscal stimulus is going to be super hard to get through Congress when the next downturn takes our $900 billion deficits up to $1.5 trillion *BEFORE* any "let's save the economy" spending measures are added, we need to nudge that Fed rate up as high as we reasonably can so we can maybe use monetary policy to end a downturn.

BUT...

On the other hand, the labor market remains very weak. The participation rate hasn't really rebounded to pre-Great Recession levels (though those levels were elevated over the previous decades' average), and wages are still not rising at anything approaching a reasonable rate. If these rate hikes continue, they will hold down hiring and wage pressure on employers, and we may end up reaching the next recession without average workers seeing ANY improvement in wages from the immediate pre-Great Recession period. Nearly every dollar of the expansion will have gone into the pockets of capital and not into the bank accounts of workers, and that makes this a true Lost Decade for the middle class.

I'd probably have voted to raise rates the first three times the Fed did so this year, but this fourth hike would have been a hard sell for me.
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Re: Fed Chair Jerome Powell

Post by Isgrimnur » Wed Dec 19, 2018 4:41 pm

The labor participation rate was never above 62% until 1977. We have yet to go below that mark.
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Re: Fed Chair Jerome Powell

Post by LawBeefaroni » Wed Dec 19, 2018 5:07 pm

Working on a strong central bank monetary policy while the federal government is destroying the nation's economic strength is like pissing on a wild fire. A nice show for everyone but you'll probably burn yourself in a bad place while accomplishing little.
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Re: Fed Chair Jerome Powell

Post by Kraken » Wed Dec 19, 2018 5:11 pm

Eel Snave wrote:
Wed Dec 19, 2018 3:10 pm
Part of the problem is that without rate hikes there's no backstop in case things go bad. You can't lower the rates to spur the economy along if they're already at or near historic lows.
Nor can you issue a meaningful stimulus package when you're already running trillion-dollar annual deficits.

I do like seeing my CDs renew at ever-higher rates, though.

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Re: Fed Chair Jerome Powell

Post by LordMortis » Wed Dec 19, 2018 5:29 pm

LawBeefaroni wrote:
Wed Dec 19, 2018 5:07 pm
Working on a strong central bank monetary policy while the federal government is destroying the nation's economic strength is like pissing on a wild fire. A nice show for everyone but you'll probably burn yourself in a bad place while accomplishing little.
What's to be done though? Not piss on the wild fire? If piss is all you have... I dunno...
Kraken wrote:
Wed Dec 19, 2018 5:11 pm
I do like seeing my CDs renew at ever-higher rates, though.
As someone exclusively buying in to relatively short term CDs since July, I concur. I had planned and mapped to begin looking at equities again in December. My map wasn't quite perfect but even if it was, I think I sill might be exclusively buying CDs with my savings at this point.

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Re: Fed Chair Jerome Powell

Post by LawBeefaroni » Wed Dec 19, 2018 10:58 pm

LordMortis wrote:
Wed Dec 19, 2018 5:29 pm
LawBeefaroni wrote:
Wed Dec 19, 2018 5:07 pm
Working on a strong central bank monetary policy while the federal government is destroying the nation's economic strength is like pissing on a wild fire. A nice show for everyone but you'll probably burn yourself in a bad place while accomplishing little.
What's to be done though? Not piss on the wild fire? If piss is all you have... I dunno...
Avoid getting burned, live to pee another day. The point is that monetary policy is an incremental adjustment, not a panacea.
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