Our drunken sailors “hate inflation, hate it,” and are in a foul mood, but are in good shape and keep spending.
The shocker was the infamous “dot plot”: Higher for even longer, ending the year 2024 at 5.25%.
Not that the losses matter to the Fed, but they matter to the Budget Deficit.
QT’s impact on the Fed’s liabilities, and massive movements between them.
It shed 24% of the Treasury securities it had added during pandemic QE, footprint in ballooning Treasury market shrinks.
Fretted about the re-accelerating economy flying above the “below-trend” growth required to get to 2%. “We will keep at it until the job is done.”
“Higher for longer be damned”: consumers and businesses.
The Fed has now shed 22.3% of the Treasury securities it bought during pandemic QE.
Powell managed to pull the rug out from under some widely held assumptions.
“In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time…”