Bank Deals Blog: Fed / Banking News

The first Fed meeting of 2022 began today. After its completion on Wednesday, Fed Chair Powell will hold the usual post-meeting press conference. No economic projections will be released at this meeting.

Expectations are high that the Fed will signal a March rate hike at this meeting. Recent turmoil in the stock market has sparked speculation that the Fed may become more dovish and delay rate hikes. For clues about what may occur this year, I reviewed the last two times the Fed became dovish after a rate hike. The first...

Next week the Fed will be holding its first meeting of 2022 (January 25-26), and the expectations are high that the Fed will be setting the stage for rate liftoff at its March 15-16 meeting. There are signs that the Fed is continuing to become more hawkish as high inflation becomes more persistent.

The latest inflation news was on Wednesday with the release of the December CPI. The CPI annual rate for December was 7.0%, the highest since 1982. This also was the third straight month with CPI over 6%. The...

The jobs numbers from the December employment report that came out on Friday were below expectations, but overall, the report was more than enough to keep the Fed on track to hike rates at its March 15-16 meeting. There’s even some speculation that the Fed could announce liftoff at its January 25-26 meeting, but that seems unlikely based on how the Fed prefers to avoid shocking the markets in tightening moves. The Fed will likely use the January meeting to set the stage for liftoff in March.

Happy New Year! Let’s hope 2022 will be the year when deposit rates rise substantially and the inflation rate falls. I’m optimistic about 2022, but there are definitely risks that 2022 will be another tough year for savers. From the December meeting, the Fed expects that inflation will start to fall by the second half of the year. It has also penciled in three rate hikes for 2022 in its December dot plot.

As we have seen many times with the Fed, their forecasts are often way off. For example, in...

Last week’s Fed meeting was eventful with the Fed announcing that it was speeding up its tapering of its asset purchases. In addition, the new Summary of Economic Projections (SEP) was released with the dot plot that suggests that there will be three Fed rate hikes in 2022. The acceleration of the tapering will allow it to complete by March, and once tapering is done, the Fed can seriously consider rate liftoff.

The December dot plot changed significantly from September. In September, nine out of 18 Fed officials were projecting at...

The two-day Fed meeting began today. At the end of the Fed meeting on Wednesday, the FOMC statement and the new Summary of Economic Projections (SEP) will be released at 2:00pm EDT. At 2:30pm, Fed Chair Powell will hold his usual post-meeting press conference. The expectations are high that the Fed will announce a speed-up of the tapering of its asset purchases. Instead of ending in June, the speed-up would allow the tapering to end in March. Since the Fed wants to end tapering before it hikes rates, a speed-up...

The last Fed meeting of the year is scheduled for next week (Dec 14-15), and there will likely be some interesting news from the meeting. First, there are growing expectations that the Fed will announce an acceleration of its tapering of asset purchases. This would result in tapering ending early next year, and that would make it easier for the Fed to pull in rate hikes. The meeting will also include an update to the Fed’s Summary of Economic Projections (SEP). New inflation forecasts and federal funds rate forecasts (i.e....

The latest pandemic news on the new Omicron variant caused large declines in both the stock market and Treasury yields. The worry is that it will slow the economic recovery. This concern was described by Fed Chair Jerome Powell in prepared remarks for his testimony today in front of the Senate banking committee. According to the Fed Chair:

Fed Chair Powell's prepared testimony also included more recognition that this year’s high inflation won’t be waning anytime soon:

The minutes of the November FOMC meeting that were released last week indicate that many...

The big Fed news this week was President Biden’s nomination of Fed Chair Powell for a second term. This will likely be an easy confirmation in the Senate. The other top candidate for the Chair was Fed governor Lael Brainard who is seen as a little more dovish than Powell. She was nominated to become vice chair of the board. President Biden will soon have three appointments to make to the seven-member board of governors. That could result in a more dovish Fed in 2022 in which the Fed moves...

October was another month of high inflation. October CPI numbers were released last week, and they showed the largest annual increase in more than 30 years. On a year-over-year basis, the CPI increased 6.2% and the Core CPI, which excludes food and energy, increased 4.6%. According to the WSJ, the CPI gain “was the fastest 12-month pace since 1990 and the fifth straight month of inflation above 5%.,” and the Core CPI gain was “the largest increase since 1991.”

Economists are seeing an important change in the inflation data. More...