• 3 minutes Looming European Gas Crisis in Winter and North African Factor - a must read by Cyril Widdershoven
  • 7 minutes "Biden Targets Another US Pipeline For Shutdown After 'Begging' Saudis For More Oil" - Zero Hedge Monday Nov 8th
  • 12 minutes "UN-Backed Banker Alliance Announces “Green” Plan to Transform the Global Financial System" by Whitney Webb
  • 2 days Microbes can provide sustainable hydrocarbons for the petrochemical industry
  • 27 mins Building A $2 Billion Subsea Solar Power Cable From Chile To China
  • 1 hour GREEN NEW DEAL = BLIZZARD OF LIES
  • 13 hours Hunter Biden Helped China Gain Control of Cobalt Mines in Africa
  • 1 day CO2 Electrolysis to CO (Carbon Monoxide) and then to Graphite
  • 1 day NordStream2
  • 5 days Is anything ever sold at break-even ? There is a 100% markup on lipstick but Kuwait can't break-even.
  • 5 days Modest drop in oil price: SPRs vs US crude inventory build
  • 1 day "Gold Set To Soar As Inflation Fears Mount" by Alex Kimani
  • 6 days Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 6 days 2019 - Attack on Saudi Oil Facilities.
David Beckworth

David Beckworth

David writes the Blog: Macro Market Musings

More Info

Premium Content

Fed Showing Signs of Awareness That Has Been Absent for Months

You may have missed it, but this afternoon a slumbering giant with a formidable arsenal of economic weapons began to awake. That giant is the Fed and its formidable arsenal is its ability to further expand its balance sheet and shape nominal expectations. Though the Fed did not fully awake today, it showed signs of awareness that have been absent in the past few months. Specifically, this excerpt from the FOMC press release reveals the Fed is becoming more concerned about the low levels of inflation:

Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate.

The Fed is finally getting concerned that inflation--a symptom of aggregate spending--is not where it should be.  As Colin Barr notes, this is the Fed's first explicit acknowledgment of this worrying development and it implies the Fed is one step closer to a further loosening of monetary policy.  Ryan Avent agrees on this point.

So the slumbering giant is awakening.  However, there seems to be quite a bit more awakening to do because the excerpt above claims that "long-term inflation expectations are stable." Take a real close look at my previous post.  Using different measures, this post shows that long-term inflation expectations are not stable.  This part of the statement leaves me puzzled.   

Overall, though, this is an improvement over the outcome from the last FOMC meeting.  Maybe Santa Claus Bernanke will grant me my Christmas wish after all.       

Update:  A number of Wall Street economists also view this statement as a step closer toward further monetary easing. It will be interesting to see if the market via changes in expected inflation, value of the dollar, and other asset prices agrees.

By David Beckworth

Source: Macro Market Musings


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News