Now what…

[Charlie HallKeymaster]

FYI — I shared this on the Alumni Hub but including it here since it affects y’all too…see you in Seattle!

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Good morning EAGLs!

It has certainly been an eventful week. We have a new president-elect, a flipped Senate, and we will soon see what happens in the House. I will refer you back to my earlier comments from Delta Track about the likely economic outcomes of this election and the Moody’s homework reading I distributed earlier. Of course, whether or not Congress ends up divided will likely influence how many campaign promises get turned into actual legislation, though both parties have previously shown an inability to agree on specific policy measures to enact even when their party is fully in control.

Nonetheless, I plan to release a series of posts here in the forum that will address the impacts of economic policy measures as they become clearer. To kick things off, I have attached the transcript of Jay Powell’s speech on Thursday which provides a great summary of where we stand economically at the moment and alludes to the Fed’s stance going into next year.

Here are my takeaways from that speech after the FOMC meeting:

1. Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made great progress toward the FOMC’s 2 percent objective but remains slightly elevated.
2. The FOMC seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run and currently judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate.
3. In support of its goals, the committee decided to lower the target range for the federal funds rate by 25 basis points to 4-1/2 to 4-3/4 percent. In considering additional adjustments to the target range for the federal funds rate, they will carefully assess incoming data, the evolving outlook, and the balance of risks. They will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities and remain strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
4. In assessing the appropriate stance of monetary policy, the committee will continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of it’s goals. Their assessments, as always, take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Stay tuned for my next post, which will likely be after the House situation is fully resolved. But, as usual, if you have questions or comments, feel free to reply to this post!

Charlie

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