Daily update
Daily update
- The Federal Reserve did not change interest rates (it was not a skip, according to Fed Chair Powell). The press conference presumably did intend to sound hawkish, and presumably did not intend to sound economically incoherent. The fabled “dot plots” signaled two rate hikes—given how these are prepared, they are unlikely to be a coordinated Fed message.
- Powell said pausing allowed the Fed to get more information before making decisions. At a time when data is less reliable, pausing to reflect should be a way of life for policy makers, not a revelation at the eleventh hour. Tight labor markets were emphasized, which makes modest unit labor costs and weak real wage growth awkward to explain.
- Ahead we have the ECB. The ECB policy decisions have an air of auto-pilot about them, and so the expectation is for a rate hike again today (because that is what the ECB did last time).
- The People’s Bank of China eased another interest rate—this was not unexpected, and came after an accelerated and broad slowdown in domestic retail sales growth. US retail sales lie ahead—these are far more important to the global economy as the US buys more complex products with inputs from a larger number of countries.
