The consensus view is that the Fed will announce an increase in the Fed Funds rate range by a quarter percentage point when it releases its statement tomorrow. So now the question is about the forward guidance and the economic outlook provided in the policy statement. At this juncture, I don't expect big changes. I expect the Fed to be more upbeat, but I do not expect it to change guidance. Some thoughts below
Looking for a Goldilocks hike cycle
Let's look at why this matters. Right now, the US economy is doing well. Indeed, it is doing well enough that the Fed thinks it can gradually raise rates without derailing economic momentum. But the worry is twofold.
Given how late in the economic cycle this rate hike train is occurring, the biggest worry is that the Fed causes the next recession....
As this site is now reader-supported via Patreon, the remainder of this article is only available to subscribers at a specific patronage level. Articles at patronage levels BRONZE, SILVER, and GOLD are denoted by the categories in blue capital letters above the post. Posts categorized DAILY are available to both SILVER and GOLD patrons.
Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.