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…”
The flow of cash under QT and government deficits.
The Fed has now shed 20.5% of Treasury securities it had bought during pandemic QE.
While, for the first time, the Fed’s QT and refilling the government’s checking account (TGA) pull liquidity from the markets simultaneously.
Most people in finance today cut their teeth in the era of Easy Money, when history books were thrown out the window. But that era is over.
Most people in finance today cut their teeth in the era of Easy Money, when history books were thrown out the window.
Core inflation “has not really moved down. It has not reacted much to our rate hikes. We’re going to have to keep at it.”
“… to assess additional information and its implications for monetary policy.”
QT on track, bank liquidity measures unwind.