“We’ll Probably Still Be Left with Ground to Cover to Get Back to Full Price Stability”: Powell at the FOMC Press Conference

“The best thing we can do for the US is to fully restore price stability, and not fail in that task, and do it as quickly as possible, but also with the least damage we can.”

By Wolf Richter for WOLF STREET.

On several occasions during today’s post-FOMC-meeting, Powell should have used the Taser that I have exhorted authorities (multiple times) to equip him with. When a reporter asks a repetitive, hypothetical, trick, stupid, manipulative, or unanswerable question, or tries to put words into his mouth, he pulls the Taser out from under the lectern, aims, and ZZZZZAPPP, which would shorten and liven up the press conference. WOLF STREET commenters have offered to “pay” to see this, which would bring in revenues to cover part of the Fed’s massive operating losses, and it would stir up public interest in the FOMC press conference.

Failure to implement my suggestion results in a long and hard-to-follow press conference that I then have to spend hours sorting through to extract the most important points that Powell actually made, in his words.

So here we go.

Not even thinking or talking about rate cuts at all: “The Committee is not thinking about rate cuts right now at all. We are not talking about rate cuts,” Powell said. “The question of rate cuts doesn’t come up, because it’s so important to get that first question as close to right as you can,” Powell said.

“We are still very focused on the first question, which is, have we achieved a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time sustainably? That is the question we are focusing on,” he said.

“The next question will be for how long will we remain restrictive? We said we will keep policy restrictive until we are confident that inflation is on a sustainable path down to 2%. That will be the next question. But honestly right now, we are tightly focused on the first question.”

Not considering slowing QT: “The Committee is not considering changing the pace of the Balance Sheet runoff. That is not something we are considering. I know there are many candidate explanations for why rates have been going up, and QT is certainly on that list, although it could be playing a small effect,” he said.

Incidentally, the Treasury Department today came out with a list of 12 reasons why longer-term yields have shot up, and QT was one of them. Wall Street loathes QT, and they’re throwing all kinds of things at the Fed to get it to back off, including during the press conference. ZZZZZAPPP.

No problem to re-hike after pauses. “I would say the idea it would be difficult to raise again after stopping for a meeting or two is just not right. The Committee will always do what it thinks is needed,” he said.

One of the reasons for the pause. “We have to make monetary policy under great uncertainty about how long the lags are. Trying to get a clear answer and say, I am going to assume this, is really not a good way to do it.

“This is one of the reasons why we have slowed the process down this year, was to give monetary policy time to get into the economy, and it takes time. We know that. You can’t rush it.

“So slowing down is giving us a better sense of how much more we need to do if we need to do more.”

“We’ll probably still be left with some ground to cover to get back to full price stability.” “Since lifting off, we understood there are two processes at work here. One, the unwinding of distortions and demand to the pandemic and responses to the pandemic. The other is restrictive monetary policy, moderating demand and giving the supply side time and space to recover. So, you see those two forces now working together to bring down inflation.

“But it is that first one that can bring down inflation without the need for higher unemployment or slower growth; it’s supply-side improvements like shortages and bottlenecks and that kind of thing going away; it’s getting a significant increase in the size of the labor market now, both from labor force participation and immigration. That is a big supply-side gain that is really helping the economy, and part of why GDP is so high. Because we are getting that supply. So, we welcome that.

“But I think those things will run their course, and we will probably still be left with some ground to cover to get back to full price stability. That is where monetary policy, and what we do with demand, is still going to be important.

What would warrant further tightening: “Evidence of growth persistently above potential, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Powell said in his prepared remarks.

“We are looking at the broader picture, what is happening with our progress toward the 2% inflation goal,” he said in response to a follow-up question. He listed the labor market, financial conditions, and other factors. “So we will look at all those things as we reach a judgment, whether we need to further tighten policy. If we do reach that judgment, we will tighten policy.”

How long would the Fed be OK with 3%-plus inflation? “Progress will probably come in lumps and be bumpy, but we are making progress,” Powell said. “The best thing I could point to would be the September SEP [I discussed this SEP here], where the expectation was that inflation by the end of next year on a 12-month trailing basis would be well into the 2s, and the year after that, further into the 2s. So, historically, that is sort of consistent with the way inflation comes in.

“It does take some time. As you get further and further from those highs, it may actually take a longer time. But the good news is we are making progress. Monetary policy is restrictive. We feel like we are on a path to make more progress, and it is essential that we do.”

Has the surge in long-term yields tightened financial conditions enough yet? The increase in longer-term yields “has contributed to a tightening of broader financial conditions since the summer,” he said.

“Persistent change of broader financial conditions can have implications for the path of monetary policy. In this case the tighter financial conditions we are seeing from higher long-term rates and also from other sources like the stronger dollar and lower equity prices could matter for future rate decisions, as long as two conditions are satisfied.”

“The first is the tighter financial conditions would need to be persistent. And that is something that remains to be seen. But that is critical. Things are fluctuating back-and-forth. That is not what we are looking for. With financial conditions, we are looking for persistent changes that are material.”

“The second thing is that the longer-term rates that have moved up, they can’t simply be a reflection of expected policy moves from us that would then, if we didn’t follow through, come back down.”

“We don’t know how persistent [higher long-term yields] will be. You can see how volatile it is. Different kinds of news will affect the level of rates,” he said.

Wages not a driver of inflation “so far” but that may change: “If you look at the broad range of wages, wage increases have really come down significantly over the course of the last 18 months, to a level where they are substantially closer to that level that would be consistent with 2% inflation over time, making standard assumptions about productivity over time. So, it is much closer than it was,” he said.

“In my thinking, it is not the case that wages have been the principal driver of inflation, so far. Although, as we go forward, as monetary policy becomes more important relative to the supply-side issues I talked about in the unwinding of the pandemic-effects, it may be that the labor market becomes more important over time, too.”

“The best thing we can do for the US is to fully restore price stability.” “People are really suffering under high inflation,” he said. “It is painful for people, particularly people who don’t have a lot of extra financial resources, who are spending most of their income on the essentials of life. So, we know that. That wasn’t new.

“But that did come through very clearly in the conversations we had in York. I walked away from that, thinking that really the best thing we can do for the US is to restore price stability, fully restore price stability, and not fail in that task, and do it as quickly as possible, but also with the least damage we can,” he said.

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  157 comments for ““We’ll Probably Still Be Left with Ground to Cover to Get Back to Full Price Stability”: Powell at the FOMC Press Conference

  1. zr says:

    The best thing I can do for my heart attack is to go to the ER. And not fail in that task, and do it as quickly as possible, but also I first need to be able to reach for my phone to call 911.

  2. OutWest says:

    My take on his message is that it could be worse, or it could be better, depending upon one’s perspective.

    • dang says:

      Perhaps, in spite of what he said, I think that what he did is more informative of what the underlying economic plan is, ie, the game plan.

      Who wins and who loses. I thought the Fed is saying that they will allow inflation to run in the range it has been in for the last several years. Statistically, the 95 pct confidence interval suggest that currently reported measurement of inflation lies within the 1.95 standard deviations of the mean between 4 pct inflation at the lower bound to 7 pct inflation at the higher bound, each equally likely.

      It seems that the previous winners will be the winners. The Fed codifying 5+ pct inflation as acceptable.

      • dang says:

        Just too clarify a bit about the perspective of the world that I see, as opposed to everyone else.

        Economically, America is like a coiled spring of creativity that has been neglected, left for dead by those who paid so little and gained so much.

        We are left with a timid America, populated with crude cheese heads that insisted on having a huge campfire in Teton while the entire Northwest was aflame. But have resolved to believe that God deemed their suffering was appropriate.

        America is back.

        Inflation is great !

  3. angel touch says:

    Most don’t know that what price stability translates into is wage stability as in lower wages..If we can figure out how to lower & stop wages from increasing then inflation comes down. In other words it’s ALWAYS labors fault you know guys actually doing the work to keep this whole sham running…yeah their the guys causing inflation! What a bunch of bullcrap this whole financial ponzi scheme is so blatantly against the people!
    Get rid of the FED!

    • kramartini says:

      Nonsense. Wage rises driven by productivity growth are non-inflationary. When labor is more productive, employers can compete for workers by paying higher wages while at the same time reaping higher profits without raising prices.

      • Mitry says:

        Your comment avoids asking what contribution the investor class makes. A wage increase not driven by productivity would benefit all the useless eaters at the expense of the stakeholders. The horror.

        • Dave says:

          but wage growth over the last 50 years has only benefitted the working class. The FIRE economy has been a complete bust for wealthy investors, as their wage growth has been the slowest of all classes in America. The wealth chart literally plunges for the 1% over the last 50 or so years

          oh wait, I think I was looking at that chart upside down……..

    • dang says:

      Actually, what every American company is selling is a high wage with benefits standard of living paid for the working people.

      It is always labors fault is a truism in the sense that it is self-fulling outcome. The loss of a job is devastating, leaving proud people questioning their own worth.

      I agree that the government corruption is disheartening on the one hand while on the other, an opportunity to change the world by organizing a protest demonstration. Not me, you.

      The last time I protested was against the Vietnam war which, I suppose ended it earlier than the military companies had planned. The monetary stimulus of military spending, America’s jobs program had created inflation in the late 70’s that was initially dealt with in a manner similar to the current Fed approach.

    • The Real Tony says:

      In Canada wage gains are coming in at 5.5 percent a year but the Bank of Canada’s main goal is to save the housing market from falling while understating the inflation rate. Socialism at its finest.

  4. Phoenix_Ikki says:

    The best FED chairman ever — in my Simpsons comic book guy voice over..

  5. Dick says:

    Everyone. You need to read between the lines here. Look at those quotes, and how noble they sound. I don’t know how he didn’t get a rotten tomato thrown in his face. “Painful for people…. ” it is painful for the poor. And he’s been dragging his feet for the rich. “doing as least damage as we can.” That’s what that is folks. And this is what I said in a comment months ago. Dragging their feet for an effective inflation rate above 2%. There used to be an old saying, Justice delayed is Justice denied. Well, what about that economic justice? Wait. I forgot. This is America, and you only get the justice you can afford. What can the poor afford? Nothing.

    • Wolf Richter says:

      What’s your problem? Wall Street is thoroughly pissed off at Powell and wants him to change course, cut rates, end QT, and restart QE. That’s what the rich want him to do. And they’re throwing all kinds of BS at him because of it. And you’re bitching about what exactly?

      • Einhal says:

        I won’t speak for Dick, but the 30 year rate should be at 7 by now and the balance sheet no bigger than $6 billion.

        • Einhal says:


          Going too slow.

        • Joe Sacramento says:

          I also believe the Fed doesn’t want to shock the market. QT could be more aggressive, but it has a greater effect on equities.


        • Einhal says:

          Again, why was it not a concern to “shock the market” upwards? When during a supposed health emergency, why were stocks allowed to double in value?

        • dang says:

          You probably are unaware of the trillions of man hours that have been spent on the correct monetary value by mankind.

          One wonders is a wealthy, dilettante group of people selected from the Ivy League, exclusively, able to even understand what hardship the current cycle of wealth concentration has caused for the majority of the population.

          The only way that the 30 yr yield will be at 7 % was if you offered to buy such an out of the money option.

      • kam says:

        15 years, perhaps an entire generation, of easy money for a select class of people. That’s politics not economics. But economics controls the long run and we are in the long run now.
        Amazing how all the discourse fails to connect Fiscal Policy to Monetary Policy.
        The Fed is trying to pull up the reins, the Politicians are whipping the horse.
        We shall see how long Powell, et al, can restrict when uncontrolled spending, accelerated by more War, comes to his personal residence.

        • dang says:

          I think it’s more than that. There are two bubbles that are still inflated, stocks and housing. Bubbles end suddenly unless they are carefully deflated before hand. There is a chasm, a cliff if you will, between the asking price of assets and what the buyer can afford on a monthly basis.

          It is ancient concept, called the cost of money, the vig, the interest rate.

          Given the enormity of the discrepancy between the asking price and the value, I suspect that the so called financial markets are under the warmth of the Fed’s cuddling which will move heaven and earth to prevent a collapse of asset prices.

      • georgist says:

        If Powell was on the regular guy’s side he would never have bought MBS.

        He bought MBS.

      • TomS says:

        “The best thing we can do for the US is to fully restore price stability, and not fail in that task, and do it as quickly as possible, but also with the least damage we can.”

        Wolf, does this statement sound a little like an oxymoron?

        I realize your graph from the other days suggests pauses can be quite lengthy, but I guess pausing seems to be the opposite of “as quickly as possible”. I don’t see the Fed rushing to do anything. The last thing they want is an election-year recession.

        • Wolf Richter says:

          No oxymoron at all, it shows the tradeoffs the Fed has to struggle with when it makes decisions. Every little thing is a huge balancing act. Who wants to be responsible for throwing 3 million people out of work? Or for letting inflation eat up people’s wealth and income? And the Fed has to choose which. So it’s trying to tighten the labor market a little, and it’s trying to push down on inflation hard enough to win, but without causing an economic nightmare. I have no idea if this strategy will succeed at both ends, but that’s what it is trying to do, and it makes sense to me.

        • Pea Sea says:

          “Who wants to be responsible for throwing 3 million people out of work? Or for letting inflation eat up people’s wealth and income?”

          You say that as if they hadn’t definitively chosen the latter in 2021.

        • Wolf Richter says:

          Pea Sea,

          Yes, they massively screwed up. They completely misunderstood (willfully misunderstood?) the inflationary scenario after not having seen inflation like this in 40 years. Maybe they didn’t think inflation like this was possible anymore.

      • Matthew Scott says:

        Just because “Wall Street” is mad at what the Fed is doing doesn’t mean that it is done in the interests of “the people”. The Fed like all Government institutions exists to defend the interests of the Capitalists as Class. That Class is made up of different sectors that often have different immediate interests and those are what we see in the debates between the capitalist political parties. Fed policy is set by what they believe to be in the best interests of US capitalism and never what is in the interests of working people and the poor…

        • phillip jeffreys says:

          Straight from the 19th century!

        • dang says:

          Wall Street is actually overjoyed with the Fed’s continuation of it’s decades old policy of no loss for wall street because it is too important too lose money because it made a bad bet.

          The Fed is the cause that is tasked with countering or undoing it’s own obvious, gambling habit. I think that the tolerance this Fed has shown the gamblers that have lost is not appropriate and indicative of an industry captured group of dilettantes.

    • Gaston says:

      What do you want?
      The ability to help “the poor” was decades ago. In our current situation, any outcome will hurt the poor.
      Will high rates help the poor? No, they will lose their jobs. Will low rates help them? No, inflation will hurt them.

      What justice do you propose? About all that can be done is acknowledgment and that, frankly, will not help anyone.

      • dang says:

        High rates will help the poor who can’t borrow money but are penalized by having to pay the continuously, and automatically increase in the price of goods and services.

        Higher interest rates will decrease the rate of inflation. The current FFR is at or near the best estimate of general inflation which establishes a second order equilibrium between the increase in price that any firm imposes and the loss of business the price increase caused.

      • JimL says:

        Right now, service inflation (read wages) is driving most of the inflation in the economy. This means people who work for a living are doing incredibly well.

        It may not make up for 30 years of getting screwed, but right now the FED is most certainly not hurting the workers over the investing class.

  6. 2banana says:

    Massive government deficit spending is counted in GDP. $2 Trillion in 2023 alone.

    “That is a big supply-side gain that is really helping the economy, and part of why GDP is so high.”

  7. Bobber says:

    I think Alec Baldwin should be hired to operate the taser.

  8. spencer says:

    Parrot? “The Party’s Over: Atlanta Fed Slashes Q4 GDP Estimate From 2.3% To 1.2%”

    Oct 27, 2023 at 12:23 pm
    Party is over. Looking for a real sell off.

    • Wolf Richter says:

      It’s too early in the quarter for the GDPNow to have enough data. It’ll go all over the place.

      But let me tell you: if you get 2% growth after a quarter of 4.9% growth (which will be the base for the 2% growth), it’s close to a miracle. QoQ data works that way. That’s why a huge quarter is rarely followed by a huge quarter.

      The normal rate of growth in the US is just under 2%. And 1.2% would be well within the normal range.

      • BS ini says:

        Perfect math education which so many miss from headline data. Or the masses which don’t even know percentages tax rates budgets or the latest feed about student loans and accruing interest. Wonder how many folks even know what accruals are? I don’t want a rapid response from the Fed that would create deflation of assets rapidly or restrictive monetary policy that would lead to large employment shifts. Just like war which destroys buildings and infrastructure on a devastating level causing massive tolls on families businesses and community that is not rebuilt quickly if destroyed. So a slow process though painful like rehab is necessary in order to ensure a stable recovery.

      • kam says:

        And what would the GDP growth of 2% be without Debt growth well in excess of GDP?
        It’s like keeping your tummy full by eating your body.

        • Wolf Richter says:

          Don’t complain to me about that. Complain to your Congressperson.

        • 91B20 1stCav (AUS) says:

          Wolf – this. (…and NEVER stop. Too-many of us have forgotten, or never learned, that your House Rep. is YOUR voice in DC, and not this strange perception of the Executive (or party) as an elected king(s) or queen(s) (won’t address, here, the issue of the number of Reps fixed at present numbers back in 1929 when the population was half of what it is now…). Watching/communicating with them is a constant PITA, surely, with constant disappointments arising from the compromises necessary from dealing with the fractiousness of our species, but IMHO MILES better than the royalty/quasi-‘royalty’ Franklin saw humanity historically backsliding into. Stay ‘above’ it, go along, and admit you’re really ok with the way things are-or take a deep breath, knowing you’ll get your hands dirty and heart and knuckles frequently busted on your way to being heard in our halls of power…).

          may we all find a better day.

      • spencer says:

        Money alone sets all the world in motion – Publilius Syrus 42 B.C.

  9. JeffD says:

    [What would warrant further tightening: “Evidence of growth persistently above potential…”]

    He also said that short term potential is much higher than long term potential due to all the extra money sloshing around from the reaction to the pandemic. He might as well have added that there can be no such thing as inflation, given that view.

  10. Glen says:

    Impossible to know what Congress will do with funding the government but if it shuts down that would impact the economy. Powell wouldn’t likely have his data so no decisions other than to hold which is the likely event anyway.

  11. Ev Last says:

    Wages not yet a driver of inflation? The greatest frequency of strikes since the 70’s must be a collective hallucination the rest of us are having.

    • Ed C says:

      As if the prices of new vehicles weren’t already alarming. I’m hoping my RAV4 outlasts me.

    • Wolf Richter says:

      That may show up in the numbers eventually, but I haven’t seen it show up yet. Negotiated wages like this take a while to be implemented and show up as actual wage gains.

    • Warren G. Harding says:

      Greedy corporations.

      • kramartini says:

        Did corporations all of a sudden become greedy? Were they not greedy when there was no inflation?

        What we are seeing is demand-pull inflation caused by excessive money. Basically an economic game of musical chairs. If prices were lower, there would be widespread shortages.

        Choose your poison.

    • Glen says:

      Unions only represent 11% of workers compared to 33% in the 1950s. So there is probably some impact but not nearly as significant given the decline of unions. People forget back to a time when socialism of various flavors was sweeping the planet, including the US and Europe. It lost unfortunately back hopefully it will make a comeback.

  12. Tom H says:

    Thank you Wolf for this great summary. Hard for me to imagine the reasoning for staying paused right now- unless they perhaps sense imminent damage if they hike.

    • Wolf Richter says:

      Short-term rates are at 5.5%. Inflation is below 5%.

      But long-term yields are what actually impact the economy. All kinds of interest rates depend on long-term Treasury yields, from mortgages to corporates loans. I want to see longer-term yields rise above 5.5%, but that’s markets doing their thing, and it will get there with many ups and downs.

      So that’s what the Fed wanted to accomplish — push up borrowing costs, and most borrowing costs are linked to longer-term Treasury yields. Powell discussed that today — and it’s in the article.

      As long-term rates continue wobbling higher, the Fed can let it develop and watch. We haven’t seen the economic effects of 5.5% long-term Treasury yields yet. Or 6% long-term yields. And that’s what matters.

      At the same time, if you get to 5.5% or 6% long-term yields too quickly, without given markets time to adjust, all kinds of stuff can happen that I wouldn’t want to happen. It takes years to bring down inflation without killing the economy.

      The HUGE mistakes the Fed made were in the years before it started hiking. Now it’s doing pretty good.

      • Cloud Cover says:

        “The HUGE mistakes the Fed made were in the years before it started hiking. Now it’s doing pretty good.”

        That’s why Powell won’t win a Nobel Prize in Economics. If I knew more about economics, I’d do a study on the correlation of receiving the award and long-term accuracy or benefit to the economy.
        I suspect the correlation would be negative.

      • WB says:

        And suddenly, the ten-year is down to 4.7% this morning…

        Wolf’s prediction that the ten-year goes above 5.5% is very optimistic. Personally I am looking forward to more real estate analysis from Wolf, especially after the recent lawsuit.

        • Wolf Richter says:

          So tell me, you genius, if the move of the 10-year over the past few days was anything unusual? This is a three-year chart. The last entry is the current yield of 4.66%. The movement is small compared to prior movements. What is it with all this stuff suddenly coming out of the woodwork?

          It’s called normal volatility.

        • MM says:

          “Wolf’s prediction that the ten-year goes above 5.5% is very optimistic. ”

          Short term rates are already at 5.5% – and future money needs to be worth more than current money. Ergo, longer rates need to climb above 5.5% for equilibrium to be reached.

          Not a great time to be a bond bull.

        • blahblahbloo says:

          The fact that Janet Yellen will now prioritize auctioning off more short-term debt vs. long-term makes it a pretty good near term trade to go long US2Y and short US10Y. US2Y barely moved. Is there reason to believe that there’s more going on here than that?

        • Wolf Richter says:

          2-year yield already bounced a little today. 10-year yield also came off the low this morning. Don’t pay too much attention to just a day or two in moves.

          Here it is:


        • blahblahbloo says:

          That should read short US2Y and long US10Y.

      • kam says:

        I completely agree that the Fed is doing a responsible job today, a job completely neglected since Greenspan, Bernanke and Yellen.
        However, personal observation tells me there are many walking dead out there that don’t even know it because the Fed, for decades, destroyed Price Discovery. Too much money sloshing around. Too easy to borrow.

      • nsa says:

        “Now it’s doing pretty good.”
        Grammar nazi here. Good is an adjective. Well is an adverb. Pretty is as an adjective but usually avoided as a slangy adverb.

        • Wolf Richter says:

          I just ❤ this BS from people who are ignorant about grammar.

          Good can be used BOTH as an adverb and adjective. Look this stuff up before you post.

          It also can be used as a noun and as an interjection.

          Random House Webster’s Unabridged Dictionary: “GOOD is common as an adverb in informal speech, especially after forms of do: He did good on the test. She sees good with her new glasses. This use does not occur in formal speech or edited writing, where the adverb WELL is used instead: He did well on the test. She sees well with her new glasses.”

          And since we use “informal” speech here all the time (from “it’s” to “Powell’s gonna have a cow“), it is perfectly appropriate in style and grammar for WOLF STREET. Maybe not appropriate for a legal document.

          I should charge for grammar lessons like this. $50 per snippet. I used to teach this shit — the difference between informal and formal writing and when to use which, among other things, way back in the day, “Business Communications” at UT at Austin.

        • drg1234 says:

          Hook ’em!

        • Pea Sea says:

          “Grammar nazi here.”

          Perhaps you like to think of yourself that way, but you’re not doing it too good. Just by using the word “nazi” uncapitalized to mean “stickler for rules” you have already lapsed into the sort of informal writing that you’re castigating Wolf for.

          “Good is an adjective. Well is an adverb.”

          A real linguistic nazi would have used italics or inverted commas to indicate mention, rather than use, of “good” and “well.”

          “Pretty is as an adjective but usually avoided as a slangy adverb.”

          You appear to have omitted an adjective following the reflexive verb “is.” Perhaps you should engage the services of an editing nazi.

    • SpencerG says:

      My guess is that they want to hold off on rate hikes until December or January… do one or two more BEFORE the spring of next year…and then lay off until after the election is over. Like with Volcker… there is a lot more political pressure in a Presidential election year to CUT rates than afterwards… when the Fed can do pretty much as it chooses.

      Volcker was forced by Carter to back down in early 1980 but was given (or took) free rein following the election to send the rates to the moon.

      • Cookdoggie says:

        I wish Volcker was still alive and writing editorials, I would love to hear his thoughts about things right now. Reading the current crop of ex-Fed governors rings hollow, and I wonder how much insider trading they each did.

  13. p says:

    Instead of a taser, Powell could use the tactic that the prosecutors used with SBF. Bring a pile of his previous statements into the audience and hold them up in front of the journalist’s face.

    Powell: “This conference will not continue until you give me evidence that you can read and understand English. What is this word right here?”

    Reporter: “Uh, I don’t remember.”

    Powell: “The word is HIGHER. You have shown me that you do not understand English, so the conference is closed. Bye.”

    • Steve2wryt says:

      One other tactic could be what I believe the British Prime Minister uses in Parliament when asked a redundant question: “I refer the kind gentleman to the answer I gave moments ago.”

      But the Taser would be much more effective in shortening the affair. Maybe they could install one in each of the chairs? (Let’s see, press C-3…zap!)

  14. w.c.l. says:

    Taser? If Powell had the arm and the aim I’d like to see him fling a pie right into one of these idiots’ puss.

  15. SocalJimObjects says:

    One last trick the market can pull to get the Fed to back off: a 30% to 40% crash in short order, say a month. After that it’s QEternity.

    • Wolf Richter says:

      It won’t be “QE eternity.” But the Fed may declare that it’s finished hiking because markets are now finally cooperating with the Fed’s efforts to tighten financial conditions.

      • SocalJimObjects says:

        If the 30% to 40% drop happens say in a matter of months, then I would agree with you, that’s why I said “a month”. The fear will be too much, and the Fed will ease quickly. Call it QTantrum.

  16. KGC says:

    No matter what the Fed does, Inflation isn’t going to be contained until Congress does it’s job and actually passes a budget and sticks to it. 10+ years of continuations brought us to this.

  17. 12 Horsemen from the Fed says:

    From Bloomberg News, “Powell Hints Fed Is Done With Hikes in Pivot Cheered by Markets

    By Steve Matthews and Craig Torres
    November 1, 2023 at 3:15 PM PDT”

    I am fully aware that Wolf always says, RTGDA not just the headlines, but this time it’s appropriate to skip the (Bloomberg) article and ignore the headlines. Pre-markets already up, giddy with the possibility of a pivot.

    Just finished reading Wolf’s article … oh yeah, we’re getting a rate hike next! I’m starting to think Powell knows what’s he’s doing … just being cautious. He’s applying the ‘perturb and observe” method with the rate hikes, and the pause between hikes is the observe part of the method. Rate hikes are the perturb part of the method … if anyone is wondering.

    • Einhal says:

      I’m not actually convinced that the markets are giddy with the prospect of a pivot. More that the algos are going wild on this “prospect,” figuring they can flip their shares at a profit before reality sets in.

      That’s all “trading” is these days.

      • Anthony A. says:

        Correct, as it is now, the stock market is not used for investing, but short term profit taking.

      • Fed Up says:

        I’m hoping you are right that it’s the algos kneejerk reacting. I still think Powell should have been more hawkish in his speech. He needs to knock wall street down to size. Of course, wall street will probably spin it into what they want to hear anyway.

        • Einhal says:

          I agree on that. But every time the market reacts like this (up 1,000 points in the last 2-3 days), it loosens conditions, adding more fuel to the inflation fire. It’s very counter intuive.

  18. John says:

    Thanks Wolf,
    I have been wondering if Japan can have a part in US. long term rates going up also. Demand for dollars to buy the yen, or selling U.S. treasuries? I dream of higher rates, and QE being dead and gone.

  19. Icy Manipulator says:

    The best thing the Fed can do for the US is to cease to exist. We need hard money and full-reserve banking, not “price stability.”

    • Doolittle says:

      Truly, but not going to happen in a corrupt world.

    • JimL says:

      We should bring back buggy whips and rotary dial phones as well.


      Every first world country in the world has a FED. There is absolutely no reason they shouldn’t.

  20. phleep says:

    The remark on immigration struck me, as going against a very popular populist narrative right now:
    ” … supply-side improvements like shortages and bottlenecks and that kind of thing going away; it’s getting a significant increase in the size of the labor market now, both from labor force participation and immigration. That is a big supply-side gain that is really helping the economy, and part of why GDP is so high. Because we are getting that supply. …”
    If we stop all immigration, I think it implies, there is a big supply shock, thence more inflation. I’m not taking a position on it, just observing the remark.

  21. Thomas Curtis says:

    Thanks Wolf, that was excellent.

    I am betting (this morning) that we are going to have a Santa Claus Rally. Further, I put the odds at over 50% that the FED is done tightening for this cycle and certainly for a couple of months.

    China appears to be working their way out and Europe is on hold.

    It is time to buy equity for a rally and maybe beyond.

  22. Brendan says:

    What about the fact that people are no longer willing to become teachers, or nurses, or so many other critical “infrastructure” type jobs? Positions where people are being burned like cord wood and are still struggling to keep up with his price stability, but that the economy desperately needs to function effectively long term? It’s going to take $$$$$$ to incentivize new takers. The misallocation of all the newly minted dollars they made is the root cause of this dilemma, IMO. I agree that they are doing a better job with their lift off, but the bar was pretty damned low, and for me, to hear him say wages are not the main driver of inflation is insulting. I don’t expect them to do anything but what they’re doing now, and I understand his words have to fit the narrative. And some of his words did cut pretty close to the chase, but I guess maybe I think it would just be nice to hear some more frankness and realistic terms from them instead of the pie in the sky silliness.

    • WaterDog says:

      “It sounds like this is a Fed that really doesn’t want to hike again,” said Mark Cabana, head of U.S. rates strategy at Bank of America.

      Powell & Steve Lieseman’s back and forth was so cringey about the “hiking bias.”

      Powell came off as no hikes unless there is a surprise. He said Sept. SEP was old news and *maybe* 1 more hike.

      He kept saying the debate was whether they’d hiked enough.

      Recession not in baseline scenario.

      Peak rates and hold.

      Wasn’t Hawkish imo

      • Wolf Richter says:

        Powell should have Tasered Liesman, who was trying to put words in Powell’s mouth and maneuver him into a corner to give his CNBC hedge-fund cronies and algos some quickie fodder. I have no idea why Powell didn’t Taser him. You cannot intelligently respond to manipulative BS like that.

        • WaterDog says:

          @ Wolf you are correct. On CNBC they had literally said that prior to Powell’s presser. They were trying to get him to say it.

          Idk why they would “want” it though other than volatility or shorts.

          Usually CNBC are “pivot mongers” and want stonks to the moon.

          I did think it was weird that Powell was so adamant against it tho.

          Be Hawkish Pow Pow!

    • kam says:

      Wages, per se, cannot cause inflation. Increasing wages come out of a corporation’s cash flow, which in turn causes increases in prices. Increasing prices means less is sold.
      I’m with Milton on this. Inflation is always and everywhere a Monetary Phenomenon. Without the Fed’s money printing and interest rate suppression, Government couldn’t spend so much and Wall Street would have to figure out how to make money honestly.

      • JimL says:

        What you said is wrong.

        There is always give and take between capital profits and wages. For 30 plus years capital has been winning. Now the pendulum is heading back the other way. Wage (service) inflation is driving overall inflation. It will continue until we get some sort of semblance of balance between wages and asset prices.

    • Warren G. Harding says:

      Corporations are still loath to give wage increases to current employees, only when changing jobs will you see more $$’s.

  23. John H. says:

    Helpful summary, Wolf. Thank you.

    Many commenters question the speed of Powell’s monetary actions: gradual or abrupt, as Fed attempts to “fully restore price stability.”

    But when was that period Powell implies, when the prices were stable? For example:
    – Energy gyrations over the past 150 years;
    – Housing, which swooned in 2006, and returned to lofty recent heights
    – S&P, which dropped 50% in 2000, rebounded till 2009 and dropped 50% again to 700 then increased 500% to today’s value
    – Bond prices (and interest rates), which seemed relatively stable til 2021…
    – Car prices over last several years
    – Etc., etc….

    In the mean time, debt has grown hideously, due at least in part to the debt-enabling interest rate manipulations used quell the perceived crisis (financial, housing, healthcare, geopolitical) of the day. That debt was pretty easily handled when funding rates were in the 2% range, but the bill is coming due with rates rising to 5% and beyond.

    Some stability!

    Rather than questioning the best tactic to achieve the “stability” goal, maybe the more important question is whether the goal itself is realistic, healthy and achievable.

    • georgist says:

      I’m afraid we can’t talk about house prices, the most expensive thing for most people, because housing has been designated an “asset”.
      Happy to clear that up for you, please return to the mines.
      If you have any further qualms on this topic please get ready to be beaten down by a bunch of people who were born before 1970 who don’t care one fig about what happens to anybody else.

  24. WB says:

    LOL! After almost 15 years of free money for the bankers and financiers, now the Fed is concerned about price stability? LMFAO!!!!

    “Full FAITH and Credit” and all that.

    Hoping those T-bills get to 6% in a hurry.

    • Sean Shasta says:

      @WB: Free money and low, low interest rates have been going on since the Greenspan years. Greenspan was so duplicitous that he decried “irrational exuberance” while stoking the fire. He also played a huge role in housing speculation by encouraging people to take variable interest loans tacitly signaling that the Fed would keep rates down.

      The Fed lost the battle for integrity a long time back and there is no going back now.

  25. Debt-Free-Bubba says:

    Howdy Lone Wolf. You were around with Gomer Pyle?
    Almost had to watch the Powell speech on You Tube…………

    • dougzero says:

      He is not hard to watch for me. I found it amusing to some degree. He is mighty gentle with foolish pointed questions. And I thought he was open about where they are. I had never watched before this time.

  26. Mike R. says:

    Fed Chair Powell is a smart and effective public servant, IMO. Remember, like any politician/government leader, he has to play the hand dealt to him by predecessors.

    He helped (probably engineered) the inflationary impulse that occurred coming out of COVID. That was needed to give the economy some breathing room from the massive debt overhang.

    It takes time for that impulse to dampen out (wage hikes, lower price hikes, lower wage hikes, etc.).

    People don’t seem to realize that there is lots of demand destruction going on out there in the real economy that isn’t propped by US Government deficit spending. So those two factors are sort of cancelling each other out with respect to overall effect.

    The Fed’s QT is directly contributing to higher long term rates; something they are intentionally doing.

    Deficit spending in Congress will be slowing but not going away. That is another goal of Powell and Yellen as this continued level of deficit spending is also an existential threat to dollar hegemony.

    • georgist says:

      He made a huge mistake in buying MBS.
      That is going to cause massive issues.

  27. JG says:

    WOLF – the 10 year is crashing now as the market has sniffed out that the FED is done raising rates. The FED is somewhat “hawkish” (for the FED) in rhetoric, but quite dovish in their actions. CPI is a lowball joke. Inflation remains white hot in many areas: home prices (have gone back up in most markets for 2023, and NO this is not just “seasonal”), rent, food, energy, services, …you know the stuff everyone actually needs…Still no MBS sales, only roll-off. Inflation “higher for longer”

    • Wolf Richter says:

      “…the 10 year is crashing now as the market has sniffed…”

      1. The 10-year is not “crashing, it’s rallying, meaning price goes up, yield goes down.

      2. So tell me, dear genius, if the move of the 10-year over the past few days is anything unusual? Below is a three-year chart. The last entry is the current yield of 4.66%. The movement is small compared to prior movements, up and down. It’s called volatility.

      3. What put downward pressure on the 10-year yield since yesterday 8:30 am is the huge announcement made yesterday at 8:30 am by the Treasury Dept on shifting issuance from longer-term notes and bonds to the 2-year and to T-bills. That was a huge deal, and I discussed it here yesterday. READ IT:


      • WB says:

        Doesn’t change the fact that the ten-year is not above 5.5% yet. IF the yield curve is to uninvert (or however you want to say go back to a “normal” yield curve) then the ten-year must go above the short end yields. Okay, so the treasury is shifting issuance to the short end, great, so plenty of supply. Are you saying there will be plenty of buyers…? There better be if you want the short end rates NOT to go higher. I don’t think there are buyers for any of this new issuance in sufficient numbers to keep rates where they are, let alone drive them lower. I certainly DON’T see any buyers for the ten year, so maybe Wolf is right and the ten year will go above 6%, but then how does that work with the current DEBT without the Fed…? I simply don’t see it. I see more yield curve inversion and that elusive “R” word, which will be covered up by government and Fed statisticians…

        Hedge accordingly.

        • Wolf Richter says:

          “Yet?” Who said anything about “yet?” Good lordy. The 10-year has come up over 100 basis points since July. That’s a huge move.

      • georgist says:

        As if not having the Fed under democratic control wasn’t bad enough, we now have three players.

        Until yesterday I thought we had:
        1. fiscal rowing west (deficit)
        2. Fed rowing east (higher for longer)

        Now I find out we have another paddle:
        3. Treasury rowing west (quarterly refunding term structure)

        What a ridiculous system.

  28. Imposter says:

    Thank you, thank you, thank you, for filtering out all the silly crap the middle school intellectuals from the media dish out. Your observations are refreshing!

    An idea of what to do with the piles of BS you have filtered out. Have you considered a start up firm to recycle this BS into fertiizer? Maybe name it “Total Crapola”, with a symbol of TCRP. Apparently you would have to incorporate “AI” into your pre IPO materails to get the “investors” heated up and in line to dump billions your way. No need to worry about a business plan or making profits, or even accounting, just how to absorb and hide the capital until bankruptcy.

    Sorry, my little stab at some humor this Thrusday. PLEASE keep up your good work!!

  29. Steve says:

    Lately, the tips breakeven has been widening. Any idea why? Inflation seems to have stabilized although at an uncomfortable level. Yes, the yield curve is steepening. I doubt this explains it. The only thing I can think of is the Fed’s heavy issuance. Your thoughts?

  30. CCCB says:

    Apparently all the fed bashers havent chimed in here yet, lol.

    Personally, I feel like the fed has done an amazing job. IN RETROSPECT did they leave rates too low for too long? Yes, but everyone seems to forget, the economy and the world was expected to end soon as a result of Covid. Indtead of a crash, we had a boom. And prior to Covid, the fed was already raising rates. Covid screwed everything up.

    As for higher for longer, contrary to my previous thoughts, 5% may be enough to get us back on track without crashing the economy and markets. I know a lot of people are upset that housing and car and food costs are high, but most forget that for 10 years after 2008, prices essentially stayed stagnant (except housing).

    The inflation of 2020-2021 was the result of markets and companies finally realizing they had pricing power and catching up on previous low inflation rates.

    Sorry guys, but hats off to the fed and Powell. Do I own a home and other inflated assets? Yes, but even if I didnt, I’d prefer a functioning economy to one that’s dead on arrival.

    If there’s blame to be placed, it belongs squarely on our three branches and two parties of govenment that have spent like drunken sailors, as Wolf puts it. Until we get folks in Washington that are fiscally conservative and responsible, we will continue to have problems.

    • Louie says:

      CCCB totally nails it!
      We forget Covid showed up on our doorstep in a plain brown bag. No list of contents and no instructions on how to deal with it. Our economy went in to LOCKDOWN. The FED did an amazing job of navigating this nightmare! Thank God for the FED. And for the FED bashers, do a little study of history. We didn’t always have a FED and what it was like prior is detailed in financial history.
      And an enormous thank you to you Wolf. I’m new to your site and loving it!

    • Thomas Curtis says:

      Once they decided that inflation wasn’t transitory the FED did a good job. They have my confidence now and I am betting on them in the fullest sense of the world. Santa Claus Rally here we go.

    • Sean Shasta says:

      @CCCB: Hahaha, you seem to conveniently forget ZIRP since the Greenspan years which has encouraged extreme risk-taking and forced people to chase decent returns in the stock market and speculate on housing rather than to invest prudently.

      The Fed has stimulated the economy at all costs while imported goods (primarily from China) held prices down. The so-called “wealth effect” – which essentially was using homes as ATMs – was a calculated move by the Fed to continue fanning the economy till it got red-hot during the dotcom era and 2008 and led to the inevitable busts in 2001 and 2008.

      Let’s not turn a blind eye to the calculated, past mistakes of the Fed….which they will continue to repeat. Because they are run by the rich, for the benefit of the rich. They don’t have the interests of the wider population at heart, and will do just enough to keep them mollified and quiet…not an iota more.

      • MM says:

        I think CCCB’s point is: the Fed can’t go back in time and undo ZIRP.

        All they can do is make decisions going forward, and the decisions they’ve been making are much more prudent than in the ZIRP/QE years.

        • Sean Shasta says:

          @MM: And my point is that these Fed actions to “fight” inflation are temporary and they acted only when inflation became troubling forcing them into a corner.

          My concern is that they will revert back to their old antics too soon – with lower interest rates, and god forbid zirp and QE. These people do what is in the interest of their affluent masters, not what is good for the country as a whole. And the “average” 2% inflation target gives them enough cover to pivot as soon as they can get the stats in a 2.5-3.5% range.

          So don’t give them too much credit because their track record over the last 30 years has been extremely dubious.

    • Bobber says:

      In which world is the Fed doing an awesome job?

      The Fed has blown three huge financial bubbles in 25 years, then popped them. The Fed us supposed reduce economic variability, not expand it.

      The Fed repressed interest rates for a decade, engineering an intended wealth effect that has dropped windfalls into the laps of asset holders (& older generations), while strapping shackles on the backs of workers (& younger generations).

      The Fed was recently buying MBS after housing prices went through a quick 200-300% price run. Home affordability has plummeted as a result of the Fed’s actions, and many young families are hopelessly now locked out of home ownership.

      The Fed said QE was extraordinary and temporary, but that isn’t true. QE is now a recurring tool to elevate asset prices for a wealthy minority of society.

      The Fed said its goal was average inflation of 2% over time, but we just saw 20% inflation in three years, and the Fed has no intention of reversing it. It wants to layer on several more years of 2-5% inflation. Obviously, the goals it cited were fictitious, given the Fed is not acting or even talking about achieving 2% average inflation this decade. At least a wife-beater promises he’ll never do it again.

      As for the pandemic, the Fed clandestinely violated longstanding norms and restrictions by buying assets on the long end and approving purchases of private assets such as BBB rated bonds and mortgage securities. The Fed provided hyper-stimulation such as QE and extreme interest repression to increase demand, at a time when supplies were constrained, which was a sure and obvious path to 10% inflation.

      We’ve also seen the Fed and Treasury violate long-standing FDIC insurance limits by stepping in to bail out wealthy sophisticated bank depositors.

      Cleaning up your own errors and self-created crisis does not constitute a good job. Kicking-the-can down the road by encouraging an ever-increasing debt-to-GDP ratio is not courage.

      Even as we speak, the balance sheet is $8T and still stimulating asset prices beyond what the economy can support. Key inflation metrics are still running over 4%, and the Fed has chosen to pause in an effort to avoid asset price falls for Wall Street and business interests.

      It’s about time Powell does something for workers and younger generations. It’s about time Powell lets asset prices fall to levels the economy can sustain without massive continuous stimulus.

      Given all this, if anybody thinks the Fed has done a good job, they should have their head examined.

      If Powell has truly come to his senses, it’s happened after the car has gone off the road, through a stream, and about to hit the barn.

      • Fed Up says:

        “The Fed repressed interest rates for a decade, engineering an intended wealth effect that has dropped windfalls into the laps of asset holders (& older generations)”

        Wrong! Not all older people are wealthy. Many are struggling. Sorry for the link, Wolf, but have had it. https://moneywise.com/news/economy/rate-of-homeless-baby-boomers-increasing

        No generation wants what the Fed has been doing since Greenspan except the very wealthy, mainly those in the inner circle (ie., congress).

        Also, there are many millennials who have become wealthy off the stonk market, so quit with your generation crap. I know many well off millennials and younger, but they are not usually whining on blog sites. They are actually doing something with their lives.

        • Bobber says:

          You missed the point with that reaction. Obviously there are exceptions to everything.

          Fed Beneficiaries:
          Wall Street
          Extreme risk takers
          Home owners

          Fed punching bags:
          Conservative savers
          Wage earners

          By the way, if you think the Fed hasn’t caused a massive generational transfer of wealth, you need to rethink.

        • Fed up says:

          Bobber, quit reading propaganda. It has not created a generational transfer of weath. And btw read a history book. The 1970s and early 1980s were no picnic especially for younger boomers. I’ve had it with your whiny type.

        • Bobber says:

          Fed up,

          The people entering the job market today have $34T government debt strapped on their back, debt-to-GDP ratio at all-time highs and growing fast, a pension crisis looming, and worst housing affordability ever. The government debt alone is something like $200K per household, at a time when interest rates appear to have bottomed and a new rising rate cycle has begun. Throw in housing price increases of 200-300% in the last decade or so, and you’ve effectively strapped another $200k to $1M of additional artificial home cost to their backs in most locations, assuming they can even save for a down payment after huge rent increases.

          This all represents a huge transfer from past generations, who own the lion’s share of assets as a group, to newer generations, who own much fewer assets as a group.

          Those are plain facts you need to factor in.

          You know a some successful millennials and some poor older folks. So what. Your teeny sample size is not relevant insofar as generational analysis is concerned.

          Stick to the facts and critical analysis with your posts please. Your “whining” charge is just an ad hominem attack with no substance. The lack of temperament does not suit you.

        • Fed up says:


          Look in the mirror for the problem. Older generations have had more years to save. No one did anything to you. No one held a gun to your head and told you to take out that student loan, much of which you probably used to fund things other than tuition. I got advanced degrees in the 1990s and had a 36k student loan that I stupidly paid off. You know how I paid it off? I sacrificed, did without, something you and your ilk will never understand because you are entitled. My posts are common sense, something not displayed in your posts. You want to blame other generations for your own failures. I know many milennials who are extremely successful, so I think the problem lies with you.

          Critical analysis? Lol. Your posts? Lol

        • Fed up says:


          I mentioned student loans because much of that debt is due to younger generations not wanting to pay off their debt. I have always paid my debt. How is the 34 trillion due to me? Older generations worked hard to have what they have. They weren’t into instant gratification and knew that it takes decades to achieve wealth. The problem with you is you expect to have it all immediately. I have no sympathy for you at all. I only care about the many young people out there trying and the many (not anecdotally) who are successful. You say my posts aren’t facts. Oh, but they are. You just don’t want to hear it. I’m done with your generation baiting.

        • W Wang says:

          You answer does not invalidate the point that artificial FED policy caused the wealth transfer. Some can achieve success (mostly or partlyby their own effort, by chasing or fighting against) does not mean that there are no systematic system-wide wrong doing against a specific time/generation. That’s not limited to US, that’s happening in most countries in the world: in EU, in China, etc.

      • JimL says:

        “It’s about time Powell does something for workers and younger generations.”

        Where do you think inflation is running hot?


        Workers are doing quite well.

    • jon says:

      I am a home owner ( infact 2 ) and stock holder.

      I think FED has completely failed when it comes to price stability.

      Remember Powell’s “transitory”

      FED would be over run by Fiscal Policy aka Govt.

      Govt won’t reduce spending and need their deficit to be funded.

    • Einhal says:

      I wholeheartedly disagree. By November of 2020, it was clear that the worst was behind us, and at that point, they should have stopped printing and raised interest rates. I can excuse their actions from March 2020 through the fall, but not after that, and certainly not for a year and a half after that.

      • Pea Sea says:

        “they should have stopped printing and raised interest rates”

        I mean, for the love of God, at the very least they could have begun cautiously tapering in early 2021 when it was blazingly clear to anyone with eyes that the housing market was on fire and dumb animal spirits were on the rampage in assets. Instead they kept inundating both infernos with gasoline for another full year.

        In my opinion there’s almost nothing Powell can do to save his legacy. The best he is capable of is what he’s doing right now–very slowly and very partially reversing the colossal policy error that he himself made, and patching up a bit of the damage that he did.

  31. Xavier Caveat says:

    ZZZZZAPPPV $59.95 (HD)

  32. dishonest says:

    “No problem to re-hike after pauses. “I would say the idea it would be difficult to raise again after stopping for a meeting or two is just not right. The Committee will always do what it thinks is needed,” he said.”

    At the risk of being repetitive;
    “Let’s pause the chemotherapy for a while and give that tumor a fighting chance. When the cancer therefore gets its second wind, we can always start up again, albeit from a much more pathological position”.

  33. Fed Up says:

    Too bad he didn’t care about price stability two years ago when he kept saying inflation is transitory. I was trying to give the Fed the benefit of the doubt this time, but after yesterday, when he should have been more hawkish to offset Old Yeller’s stunt with bonds, I am no longer giving them the benefit of the doubt. Now yields are dropping and stonks up (which I hope is transitory).

    • Mike R. says:

      Transitory is “relative” to the subject and expectations.

      Don’t get too wound up about what the Fed says or how they say it. They try very hard to be informative but vague.

      It’s part of the job; just like politics.

  34. Debt-Free-Bubba says:

    Howdy Folks and Lone Wolf. Would love for Powell to answer a question about previous Interest Rate Plateaus and about our current plateau or not plateau status. Would also love to see Lone Wolfs Interest Rate Plateaus going back to the 70s 80s to current. I would consider this extra credit work for the Lone Wolf, and he of course, does not need the extra credit. HEE HEE

    • MM says:

      Howdy DFB:

      One reporter had asked about a December rate hike, and Powell stressed that they haven’t made a decision yet.

      Another reporter pressed him on the dot plot, trying to corner him into confirming (or not) another rate hike, and he said that the dot plot was ‘a snapshot in time’ and not a forecast.

      Ergo, if you had asked him about our ‘plateau or not’ status, I think he would say we can’t know right now, because new incoming data will guide the Fed’s future decisions regarding rates.

  35. AV8R says:

    The yield curve was flattening nicely with the 10yr approaching 5% but now its inverting again much to the dismay of whom exactly??

    Recession no where to be seen, market rallying…. what the world needs is a 7% 2 year.

  36. Jason B says:

    Nice impressive talk, nice summary. He made all kinds of warnings. Unsurprisingly (to me) the response of the Wall Street to all these warnings is just another market rally. I think the Wall Street only heard “with the least damage we can” among all of what he said.

    I feel like there is a communication problem with the FED vs Wall Street (which keeps inflating the assets) and govt (which spends like the most drunken sailor). The markets act like the stupid son of an ultra-rich man (FED). They ignore all kinds of warnings, do stupid investments and when they bankrupt, they always ask to be rescued by the father (FED).

    March 2023 was a good chance to let the stupid investors who consistently inflate the prices fail and kill the inflation permanently. Alas, it was missed by the invention of the accommodative BTFP. I hope FED acts more wisely next time.

  37. TerraHawk says:

    I kept waiting for Jpow to throw the Treasury under the bus, but he never did. He said he wasn’t sure why 10 year bond interest rate had increased so much. Many factors, I agree, but chief among them is the necessary increase in supply. He knows this but I guess he must play the political game.

    • blahblahbloo says:

      I am an enthusiastic supporter of JPow playing the political games necessary to avoid being replaced by a clown who will bring back ZIRP and QE.

  38. Jackson Y says:

    While I think the Federal Reserve has done a decent job in this tightening cycle so far, their rationale (not decision) to hold rates steady yesterday was bullsh*t.

    Powell said the recent surge in treasury yields has already done a lot of tightening for them. The market giveth and the market taketh away. Short-term market movements should NEVER be used to make policy decisions. And he should have known that as soon as he said that, markets would more aggressively price in rate cuts & send yields plummeting, which is exactly what happened. The much-hyped “5% 10-year yields” are now back down to 4.65% and markets are now pricing in a rate cut by May/June.

    Every time there’s even a HINT of peak rates, markets immediately loosen financial conditions, counteracting the hard work the Federal Reserve has done to date.

    • Kevin says:

      Well-said. It would be a lot better to not have the press conference like what the old Fed did. The press conference is designed for the benefit of Wall Street.

    • Tony says:

      Everything said at the conference was already known. If you want to give Wall Street your money keep buying the rally which they will dump in a couple weeks again. Nothing goes straight down. TSLA needs more buyers at 70x earnings, help them out!

  39. SoCalBeachDude says:

    MW: Jamie Dimon says businesses should be prepared for interest rates to go higher

    • phillip jeffreys says:

      The same guy some of whose charges were recently awarded prison terms?

  40. Depth Charge says:

    “The best thing we can do for the US is to fully restore price stability, and not fail in that task, and do it as quickly as possible, but also with the least damage we can.”

    Then proceeds to uncork another “pause,” the 2nd in a row….

    • Bobber says:

      What’s the average inflation for the 2020’s decade going to be? Looks like 4-5% per year at this point.

      Twice the stated “target”, even with understated inflation reporting.

      • phillip jeffreys says:

        So in 2034 we can expect a 50 cent dollar! Nah….hedontic adjustments will draw out the misery!

  41. Xavier Caveat says:

    Nothing wrong with an adjust-in-time economy, pray as you go.

  42. TK says:

    I think he speaks well and is taking us on the best path despite the speculators and complainers. Give it a chance, adjust investments accordingly and be thankful we don’t have worse. Seems like a lot of sour grapes in the comments. Acting like a monday morning Q-back is easy but frankly irresponsible. I am trying to understand the investing environment and Mr. Wolfe does an amazing job explaining it. Now if only we had a crystal ball that worked.

    • Blam 35 says:

      Powell: “So, obviously we’re monitoring, we’re attentive to the increase in longer-term yields and which have contributed to a tightening of broader financial conditions since the summer. As I mentioned, persistent changes in broader financial conditions can have implications for the path of monetary policy. In this case, the tighter financial conditions we’re seeing from higher long-term rates but also from other sources like the stronger dollar and lower equity prices could matter for future rate decisions, as long as two conditions are satisfied. The first is that the tighter conditions would need to be persistent and that is something that remains to be seen. But that’s critical, things are fluctuating back and forth, that’s not what we’re looking for. With financial conditions, we’re looking for persistent changes that are material.”

      This is clearly an indication to markets that monetary policy will continue to support asset prices, so along w options expire/ short squeeze, they have what they need for a liquidity rally. Bleeping Powell!!

      • Wolf Richter says:

        I’m not sure how people can come up with such a twisted interpretation. But then no one really listens to what Powell actually says; they’re trying to read what they imagine he wanted to say between the lines. And that’s how these twisted interpretations become the lore of the land. This has happened after EVERY Fed meeting over the past 18 months. Without fail. It’s hilarious, actually.

        Re-read this section carefully – plus the other sections in the transcript where he discusses this. It says the Fed wants tighter financial conditions (that’s what “tightening” means), and higher long-term yields are a crucial part of those tighter financial conditions, and those yields are finally coming up, so with higher long-term yields working to tighten the financial conditions, the Fed might finally get to its goal of tighter financial conditions.

        What impacts the economy are long-term yields that translate into borrowing rates for consumers and businesses.

        The Fed’s short-term policy rates don’t really affect the economy that much if long-term yields aren’t coming up, which was the problem until July. Then long-term yields came up nicely.

        The Fed is trying to push up long-term yields, but cannot do it directly. So it raises its short-term policy rates and does QT and hopes that long-term yields will follow, which they haven’t done – hence the inverted yield curve.

        In terms of the economy, nothing will slow it until long-term yields are high enough.

        Powell talked a lot about that. I’m not sure how people can come up with such a twisted interpretation. But then no one really listens to what Powell actually says; they’re trying to read what they imagine he said between the lines. And that’s how these twisted interpretations become the lore of the land. This has happened after EVERY Fed meeting over the past 18 months.

  43. J Hiark says:

    Forget the taser; what he needs is the Navy’s new ray gun:

    • 91B20 1stCav (AUS) says:

      JH – mebbe trapdoors under the seating, depositing offenders onto a conveyer that dumps them on the street outside of the building (…film and total ejections at 11…).

      may we all find a better day.

  44. Radman says:

    Happy the FED is now acting like the ultimate bond vigilante, making the ‘90s versions look like rank amateurs. They may not be perfect but they’re doing a good job lately.

    • John H. says:


      They are “doing a good job” at cleaning up the problem they created…

      Much like The Cat In The Hat!

Comments are closed.