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Release The Hawks?
There's good news and bad news if you're Jerome Powell.
The good news is, the 2022-2023 rate-hiking campaign is on the verge of becoming the exception to the rule.
Generally speaking, Fed hiking cycles break something. And while there were some harrowing moments (most notably the October 2022 gilt crisis and the March 2023 US regional banking drama), nothing's "snapped" just yet.
The familiar figure above, from BofA's Michael Hartnett, is an annotated reminder of... well, a lot of things, a
Look Powell has done a good job. If they get another hot jobs print and/or inflation print they can wait a meeting or maybe go 1/4% depending on the overall number. I wanted to wretch when Larry Summers was given a big headline on Bloomberg saying 50 was a mistake. Didn’t he say we needed a 6% unemployment rate to get inflation down? Most estimates are that about 2/3 of the inflation burst higher was supply driven. The Fed has no control over supply chains. Another clue is that inflation was a problem pretty .much worldwide. And there were various fiscal and monetary policy mixes. So Larry is overconfident in his forecasts and is a founding member of hindsight capital.
“a founding member of Hindsight Capital” — very nice!
Could be this rate cut spared our nation from an inglorious chapter. Journalists, politicians, political activists and wealthy should give extra thanks.