My FOMC Reaction
The market seems to be in sync with Powell’s attempt to try to correct the error.
There are signs inflation and commodities either have or are peaking. Additionally, at this part of the cycle it appears that interest rates have topped and the dollar has peaked. Furthermore China is showing signs of getting back in gear. And just reading between the lines it appears that Europe is leaning strongly to have some kind of settlement with Putin, Biden won’t be happy but he is not living in Ukraine’s backyard.
With all that said, the big question is what happens to the economies and stock markets of the US and Europe. On top of this will be the 2022 mid-term elections.
This will be a fascinating time.
I have trying to focus on the biggest economic driver, ie, the buildout of infrastructure to deal with climate change. Oil has had a little reprieve over the past six months as green energy has been too slow in arriving, but it will take a major dose of governmental leadership and a bunch of technocrats to make this happen.
I kind of like my idea of taking the Fed Balance sheet bond holdings and instead of selling them, actually put that money to work and go around the political hassles that have held up infrastructure.