Wednesday 21 March 2018

Fed funds

The terminal level crept up 25bps to 3.25-3.5%.

Now forcasting higher GDP growth, lower unemployment, no impact on Core PCE...

Makes perfect sense with all the tax cuts, stimulus, import tariffs...

If they forecast 2% inflation and 2% GDP growth, and 3.25-3.5% Fed funds, its still easy at the terminal level for the real economy. Perhaps not so much for the financial economy.

Overall seems the Fed dont believe in MAGA, ie tax cuts, tariffs and infra spending aiming to push wages up via a wage/ inflation/ investment cycle. Lets see who is right.

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