Obviously, the September minutes will be parsed for clues as to what the committee was thinking in terms of staying the course for December despite lackluster inflation.
“Coming fresh to a place where much of the discourse was accepted or assumed by the very smart economists on the FOMC and the Fed staff helped me to see where some of that received wisdom was not holding-up well in the circumstances we were facing.”
“Take it all with a large grain of salt.”
“And the market concurs.”
“However, giving up transparency and sticking unconditionally to policy rules, i.e. rebuilding the fourth wall, carries with it enormous risks.”
“Here is my new prediction.”
“The guild is unwise to treat financial markets as some beast to be tamed, cub to be coddled, or market to be manipulated. Too many policymakers appear in thrall to financial markets, and financial markets are in thrall to policymakers, but only one of them will get the last word.”
“President Donald Trump and Treasury Secretary Steven Mnuchin met with Kevin Warsh on Thursday to discuss his potential nomination as the next Federal Reserve chairman.”
Ok, who’s ready to take another look behind the “fourth wall?”
“Either way, you gotta be super smart to run a country and sell vol. buddy, okay? It’s not easy.”
“The truth of the matter is that the market doesn’t know how to interpret the Fed.”
“It’s not crazy”…
“So hang in there, volatility longs. Only three more years ’til it all goes horribly right!”
Q: Will the FOMC hike the funds rate in December?
A: Yes, probably.