Federal Reserve, the Economy and CD Rate Forecast - Sep 14, 2021


The Labor Department released the August Consumer Price Index (CPI) report this morning, and the inflation numbers were below expectations. CPI increased 0.3% for the month, which was below the expected 0.4% increase. Core CPI, which excludes food and energy, increased 0.1% for the month, which was below the expected 0.3% increase. Even though these numbers are below expectations, they’re still elevated. The year-over-year CPI is 5.3%, a level that hasn’t been seen before 2021 in about 13 years. However, we may have passed the peak. Last month’s year-over-year CPI was 5.4%.

The Fed has been claiming that this year’s inflation surge would just be transitory. They will likely use this CPI data to justify a continuation of that claim.

The Fed shouldn’t be too confident in its transitory claim. Yesterday, The New York Fed released its August Survey of Consumer Expectations. The expectations of those surveyed are for inflation to be 5.2% a year from now and 4.0% three years from now. Not only are these up from last month, they are the highest readings since the survey began in 2013. Consumer expectations of future inflation can prove self-fulfilling.

Also, many economists are forecasting longer-lasting inflationary pressures that could prove the transitory camp wrong. According to this WSJ article:

Economists anticipate that broader, longer-lasting inflationary pressures will emerge in coming quarters. For example, many expect a rebound in rent to buoy overall CPI in the months ahead.

Next week’s Fed meeting which will include an update to the Fed’s Summary of Economic Projections (SEP) should be interesting. The Fed’s inflation forecasts from June will likely be revised higher. That may show the Fed’s confidence about inflation being transitory. The SEP also includes the dot plot which shows Fed member expectations about the future federal funds rate. In June most of the Fed members anticipated at least one rate hike by the end of 2023. It’ll be interesting to see if this moves to 2022.

Another expectation from next week’s Fed meeting are signals about tapering of the Fed’s asset purchases. With the weak August jobs report, few are expecting that the Fed will announce the start of tapering at next week’s meeting. However, there is an expectation that the Fed will signal that it may soon announce tapering, which will open the door for the formal announcement at the Fed’s November meeting. The start of tapering is the first step in the long-road to the first Fed rate hike (liftoff). Thus, the sooner tapering begins, the sooner liftoff will occur.

Banking Industry’s Deposit and Loan Levels

With the Fed’s zero rate policy in a holding pattern for the foreseeable future, two other factors will influence deposit rate changes in 2021 and 2022.

First, the deposit and loan levels at the banks will influence deposit rates. Since the pandemic began, government stimulus checks combined with lower spending has caused America’s personal savings rate to soar which has increased deposit levels at banks to record levels. Also, loan balances have fallen. That created the perfect storm for deposit rates, resulting in record low deposit rates. It’s clear that some online banks have been trying to shed deposits by slashing their rates to ridiculously low levels.

The latest data on the overall bank deposit and loan balance levels is provided by the Fed’s weekly data of Assets and Liabilities of Commercial Banks.

Fed data released on September 10th showed total deposits of $17,536.2 billion and total loans of $10,462.3 billion. From last week, deposits increased $37.4 billion, and loans increased $20.1 billion. This is the fourth straight week of deposit growth that’s larger than the loan growth. However, deposit growth has slowed while loan growth has picked up. That’s a small step in the right direction. From July, deposits are up $324.2 billion and loans are up $84.8 billion. For the last two-month period, deposit growth remains well above loan growth. It may take years of falling deposit balances and growing loan balances before loan-to-deposit ratios reach normal levels that will encourage higher deposit rates.

Treasury Yields

The second factor that may impact deposit rates this year is the economy and Treasury yields.

The lower-than-expected CPI numbers appear to be weighing on Treasury yields this morning. From last week to the close of Monday, Treasury yield changes were mixed. The 5-year yield was up 3 bps, the 10-year yield had no change, and the 30-year yield was down 3 bps. Shorter-dated Treasury yields had little change, with no change in the 2-year yield and a decline of only 1 bp in the 1-year yield.

Odds of Fed Rate Hikes

The odds of a Fed rate hike in 2022 and 2023 were down from last week according to the CME FedWatch tool. Also, the odds of a December 2021 rate hike are now back down to zero. The CME FedWatch tool lists implied probabilities of future target federal funds rate hikes based on the Fed Funds futures market. In the last several months, the odds of a rate hike at the December 2021 meeting had been zero, but that changed last week with odds of 1.7%. Perhaps the lower-than-expected CPI numbers eliminated those slight odds that inflation could surge to such an extent that it could force the Fed to act fast. The odds of one or more rate hikes by December 2022 were 49.3% early this afternoon, down from 53.3% last week.

The following numbers are based on Daily Treasury Yield Curve Rates and the CME Group FedWatch.

Treasury Yields (Close of 9/13/2021):

  • 1-month: 0.06% up 2 bps from 0.04% last week (0.10% a year ago)
  • 3-month: 0.06% up 1 bp from 0.05% last week (0.11% a year ago)
  • 6-month: 0.06% up 1 bp from 0.05% last week (0.12% a year ago)
  • 1-year: 0.07% down 1 bp from 0.08% last week (0.13% a year ago)
  • 2--year: 0.21% same as last week (0.13% a year ago)
  • 5--year: 0.81% up 3 bps from 0.78% last week (0.26% a year ago)
  • 10-year: 1.33% same as last week (0.67% a year ago)
  • 30-year: 1.91% down 3 bps from 1.94% last week (1.42% a year ago)

Fed funds futures' probabilities of future rate changes by:

  • Sep 2021 - up by at least 25 bps: 0.0%, same as last week
  • Dec 2021 - up by at least 25 bps: 0.0%, down from 1.7% last week
  • Mar 2022 - up by at least 25 bps: 0.0%, down from 3.4% last week
  • July 2022 - up by at least 25 bps: 9.2%, down from 17.7% last week
  • Dec 2022 - up by at least 25 bps: 49.3%, down from 53.3% last week
  • Feb 2023 - up by at least 25 bps: 54.5%, down from 57.1% last week

Deposit Rate Changes and Forecasts

CD Rates

Just a few banks and credit unions had noteworthy CD rate changes. The good news is that two of these changes were rate increases.

Navy Federal Credit Union rate increases just impacted their Jumbo CDs which require a minimum deposit of $100k. Rates for all terms increased 5 bps. The new rates are 0.95% (5- and 7-year), 0.75% (3-year), 0.60% (2-year, 18-month and 1-year), 0.50% (6-month), and 0.45% (3-month).

Market USA FCU just increased its long-term CD rates. Its 5-year CD rates had the largest increase. The regular 5-year rate increased 35 bps to 0.65%, and the preferred 5-year rate increased 35 bps to 1.00%. The 4-year rates had smaller increases. The regular 4-year rate increased 10 bps to 0.35%, and the preferred 4-year rate increased 10 bps to 0.70%.

The one institution that cut rates was Presidential Bank. The rates of its CDs with terms from six months to five years fell 40 bps. These cuts have moved their rates from near average for online banks to well below average. Examples include 0.10% for a 1-year CD (average is 0.46%) and 0.25% for a 5-year CD (average is 0.68%).

The big rate cuts at Presidential Bank may be due to how its loans and deposit levels have changed in the last year. Total loan balances have gone down 1.6%, while total deposits have grown by 28.3%. This resulted in a loan-to-deposit ratio that has fallen from 90.0% to 68.9%.

Even though there have been a few institutions like Presidential Bank that have made large CD rate cuts, the average CD rate has started to inch up, with slightly larger increases on long-term CDs. This can be seen in the September Online CD Indexes. These Indexes are essentially the average CD rates from ten well-established online banks.

The Online 5-year CD Index increased 2.5 bps in September, rising from 0.650% to 0.675%. This is the first monthly rate increase since December 2018. Long-term CD rates actually began falling in early 2019 when the Fed ended its rate hikes in December 2018. When the pandemic began, there were large monthly rate cuts for most of 2020. That changed in 2021. The Index has fallen at a very slow pace in 2021, with three months of no rate changes.

The Online 1-year CD Index also increased in September, but the increase was small, rising 0.50 bp to 0.456%. Online 1-year CD rates haven’t moved much this year. When January began, the Index was at 0.465%, which is just 0.9 bp above where it’s at now.

I’m only including one to three CD rate changes per institution to avoid an overload of data. All percentages listed below are APYs.

  • Market USA FCU (5y Prfd 0.65% → 1.00%, 4y Prfd 0.60% → 0.70%)
  • Navy FCU (5y Jbo 0.90% → 0.95%, 1yr Jbo 0.55% → 0.60%)
  • Presidential Bank (5y 0.65% → 0.25%, 1y 0.50% → 0.10%)

Savings, Checking and Money Market Rates

There were just a couple of noteworthy liquid account rate changes in the last week.

Two of the rate changes occurred on reward checking accounts, and both did not affect the primary rates. The cuts applied to the upper tiers.

Like the CD rate cuts, Presidential Bank made a significant rate cut to its Advantage Checking Account. However its primary rate for balances up to $25k when monthly requirements are met remains at 2.25% APY. The rate for balances over $25k fell from 0.65% to 0.40%. This results in a decline of the blended APYs for balances over $25k. For example, the blended APY for a $100k is now 0.86%, which is down from 1.05%.

The other reward checking account with a second-tier rate change was Quontic Bank. Its second-tier rate fell from 0.65% to 0.35%. However, its primary rate (1.01% APY) now applies to larger balances ($150k, up from $100k). Also, blended APYs now apply for balances above the first tier. This results in higher APYs for large balances. I’ll have more details in my liquid account rate summary.

For September, our Online Savings Account Index, which tracks the average rate of ten well-established online savings accounts, had no change. The average remains at 0.446%. This rate has been falling slowly in 2021. When 2021 started, the Index was at 0.512%.

Below are examples of important savings, checking and money market rate changes in the last week. As is the case with the CD rates, I’ve included only rate changes from the online savings accounts that DA readers would be most interested in. All percentages listed below are APYs.

  • Presidential Bank Advantage Checking 2nd tier (0.65% → 0.40%)
  • Quontic Bank High Interest Chk 2nd tier (0.65% → 0.35%)

I’ll have more discussion of the liquid account rate changes in my liquid account summary later today.

Economic and Deposit Rate Scenarios in 2021 and Beyond

The following is a review of four scenarios about how the economy and interest rates will evolve over the next few years. A rise in interest rates will almost certainly require a steady and strong economic recovery. So future interest rates depend heavily on the future health of the economy.

It’s possible that interest rate increases could be caused by a sustained period of rising inflation. In this case, the Fed may be forced to hike rates even if the economy hasn’t completely recovered. Based on history, the odds of this happening appear low. However, as I described above, the odds of this appear to be rising. Thus, I”ve added a new scenario that takes this into account.

There’s always the possibility of major shocks to the economy that could cause a depression. A depression would almost surely result in the zero rate environment to continue for at least the next decade. The odds of this are also low.

I think one of the following four scenarios is most likely to occur over the next decade:

  1. Surging inflation forces the Fed to act.
  2. Strong and fast economic recovery
  3. Slow economic recovery
  4. No sustained economic recovery

Surging inflation forces the Fed to act

April 2021 may go down in history as the first month of the post-pandemic inflation surge. The Consumer Price Index (CPI) for April far exceeded economists’ expectations. The year-over-year gain in the CPI was 4.2% and the month-to-month gain was 0.8%. Even core CPI (which excludes food and energy) far exceeded expectations. Core CPI increased 3% on a year-over-year basis and 0.9% on a monthly basis. The monthly rise in core CPI was the largest since 1981.

Inflation data from April through July continues to show high inflation. The year-over-year core PCE, the Fed’s preferred inflation measure, has increased by 3.1% in April, 3.5% in May, and 3.6% in both June and July.

For the Fed to act on a surge of inflation, it will likely require that the surge proves to not be transitory. The Fed currently expects some spikes in inflation as the economy reopens, and it’ll take more than a few months of high inflation for the Fed to worry. It’s hard to say how many months of rising inflation it will take for the Fed to act. If rising inflation continues into 2022, the Fed will have a difficult time convincing the public that it’s only transitory.

As inflation starts to look less and less transitory, the markets will likely start to suffer with larger and larger corrections. This will probably force the Fed to maintain the transitory line until it finally has no choice but to admit that it has to act.

In this scenario, my guess is that the Fed would act sometime in 2022 after more than a year of rising inflation. The difficult question would be how the markets and the economy would respond. A recession seems likely since the markets are so dependent on ultra low rates. The bigger the crash and recession, the more likely that high rates would be short-lived. This would be the time to lock into long-term CDs. My parents did that in the early 1980s with a 10-year CD that had a 16% APY.

It’s possible that the Fed may feel it cannot taper its bond buying or raise interest rates. In that case, we could keep living with rising inflation. It took quite a bit of time in the 1970s before Volcker became Fed Chair and was willing to lead the Fed to hike rates to levels necessary to end high inflation. Thus, it may still take multiple years before we see rate hikes. Even if the Fed doesn’t tighten policy, long-dated bond yields may rise. That could impact CD rates.

Strong and fast economic recovery

Of course, a quick economic recovery would be the best case scenario for deposit rates, but even in that case, the Fed won’t be in a hurry to raise rates. Their new inflation framework will likely cause them to be slower in their rate hikes than they were in the last zero rate period. In the Fed’s June Summary of Economic Projections, no FOMC participant expects a rate hike in 2021. Only seven out of the 18 expect at least one rate hike by the end of 2022, but 13 out of the 18 expect at least one rate hike by the end of 2023. So in this best case scenario, the Fed will start hiking rates by either the end of 2022 or 2023. As we learned in 2015 and 2016, it can still be a long time from the first Fed rate hike to when we see significant increases in deposit rates. It took about 18 months after the first Fed rate hike in December 2015 before we started to see widespread deposit rate increases.

Slow economic recovery

There are many things that could prevent a strong economic recovery. These include a pandemic that doesn’t go away and government policies that inhibit growth. These factors are starting to have an effect on the economy in late 2021. If economic growth is weak, that will push out the Fed’s first rate hike. In this case, we could see this zero rate period be close in duration to the last one. If it matches the duration exactly, the first Fed rate hike wouldn’t come until March 2027.

No sustained economic recovery

If the pandemic, bad government policies or other factors prevent a sustained economic recovery, the Fed may hold rates near zero for a period that would be longer than the last one, which lasted seven years. In this scenario, the economy remains weak with high unemployment and low GDP. The economy would have to improve and force inflation to rise in a sustained fashion before the Fed would even think about rate hikes.

Possible deposit rate changes in 2021 and 2022

Before the Fed starts to hike rates, it’s possible that we’ll see small gains in CD rates. Based on the 2013-2014 history, the start of the Fed tapering its asset purchases could be the first sign of higher CD rates. In May 2013, the Fed Chair started to signal that a pull back or taper of its asset purchases was being considered. The first small pull back was announced by the Fed in December 2013. This period is known as the Taper Tantrum, and Treasury yields did have significant increases in 2013 and 2014. CD rates also had increases.

The Taper Tantrum period of 2013 and 2014 was a time when CD rates went up even as the Fed was holding steady with rates near zero. PenFed’s 5-year CD yield was 1.15% from May to August, 2013 (pre-2020 all-time low). PenFed’s 5-year CD yield increased to 3.04% In December 2013 and January 2014. Ally Bank’s 5-year CD yield increased from 1.51% in May 2013 to 2.00% in September 2014. Synchrony Bank’s 5-year CD yield increased from 1.51% in April 2013 to 2.30% in April 2014, and Discover Bank’s 5-year CD yield increased from 1.50% in October 2013 to 2.10% in August 2014.

The rising long-term Treasury yields in early 2021 have contributed to the rise of long-term brokered CD rates. However, long-term yields have mostly fallen in the second quarter of 2021, and increases in brokered CD rates have moderated.

Unlike 2013, there are no signs yet of any taper tantrum. Thus, we may not see any CD rate hikes like we saw in 2013 and 2014.

Another thing that is different today than in 2013 and 2014 is the surge of deposits at banks and credit unions. The government stimulus checks combined with lower leisure spending in 2020 have contributed to record deposit increases at banks and credit unions. Most banks don’t need deposits, and thus, they are free to lower deposit rates to record low levels. This helps explain why even some online banks are offering incredibly low deposit rates (as examples, USAA Bank 1-year CD at 0.03%, Citizens Access 1-year Online CD at 0.10% and Barclays 5-year online CD at 0.25%).

Future Rates and CD Term Decisions

My hopes for CD rate increases in 2021 and 2022 have diminished. There may be an occasional CD special with a rate above 1%, but I would be surprised if we see any nationwide CDs with rates near or above 2%.

CDs with terms of 2+ years are especially unattractive these days, especially when we see the possibility of persistently high inflation. Unfortunately, there are not many better alternatives for your “safe” money. A CD with a 1.40% APY will pay 3x the interest than an average online savings account, assuming rates remain static. There are still a few liquid accounts that have rates at or near 1% without balance limits, but it’s questionable how long their rates will hold. You can also boost your overall yield by using high-yield reward checking accounts. That requires more effort, and there’s risk of rate and balance cap reductions.

Since most CDs don’t provide for much of a rate premium over liquid account alternatives, moving money from matured CDs into liquid accounts may make sense. This is especially the case if you think the Fed will hike rates in 2022 rather than 2023. However, as we’ve seen in the past 12 years, rates rarely rise as fast and as high as we expect. The next few years may be different, but you may want to hedge your bets.

It’s wise to remember that no one can predict future interest rates. So if you want to keep things simple, a CD ladder of long-term CDs is always a useful strategy for your safe money. If you’re worried about being locked into a low-rate CD if rates start rising, choose long-term CDs with early withdrawal penalties of no more than six months of interest.

CD Rate Trends

The above graph shows the rate trends of the average CD rates. These average rates are based on all the rate data that we have collected over the years. This is an interactive graph. You can choose the term of the CDs (from 3 months to 5 years) and the look-back period (from 3 months to 5 years).

As you can see in the graph, average CD rates for all terms plunged from March 2020 to August 2021. The average rates for CDs of all terms are now at 5-year+ lows. The previous lows occurred more than five years ago in December 2015, just before the Fed’s first rate hike. The average savings account rate (0.128%) is also at a 5-year+ low. The previous low was 0.177% in December 2016. One thing apparent in the charts is that the declines in rates have slowed in 2021 for all products. This suggest that deposit rates won’t fall too much more from current levels.

  |     |   Comment #1
The FED always gets it right, just like they did in 2000 and 2008. The stock market, after being on a tear like now, dropped 50 plus percent within two years of those tops. The FED also reduced rates during those two years. I wonder how this time is going to play out with rates already at zero.
  |     |   Comment #2
The article mentions that the August CPI showed inflation numbers slightly below expectations, although still wildly elevated from what was expected only moths ago (“The year-over-year CPI is 5.3%, a level that hasn’t been seen before 2021 in about 13 years.”)

I for one am not convinced inflation is dropping. Two interesting articles in the WSJ today. One explained how even through labor shortages (caused by fewer workers being available, because of COVID and also higher unemployment payments) have given lower-paid workers a raise, inflation has negated most of that (

And a second concerns the probability that upcoming rent increases will factor significantly in upcoming inflation.
“Officials at the Federal Reserve and the White House have highlighted what many forecasters expect will be the temporary nature of elevated price readings stemming from the reopening of the economy following pandemic-related restrictions. But the degree to which 12-month inflation readings fall back to the central bank’s 2% goal could rest on the behavior of rents and home prices. In recent months, housing-cost trends point to more persistent, rather than transitory, upward price pressures in the coming years.”
“Government agencies don’t take soaring home prices directly into account when calculating inflation because they consider home purchases to be a long-lasting investment rather than consumption goods. Instead, they calculate the imputed rent, called owners’ equivalent rent, of what homeowners would have to pay each month to rent their own house. Owners’ equivalent rents, which rose around 3.3% before the pandemic hit, cooled earlier this year, rising just 2% in the 12 months ended April.”

According to the article, while home prices kept rising right on through the pandemic, rent prices have only recently started to rise significantly, but will be making up for lost time.

  |     |   Comment #3
"The one institution that cut rates was Presidential Bank."

Presidential was (past tense) one of the few rate leaderboard banks that accepted irrevocable formal trust accounts. I gave them a significant assist in boosting their loan to deposit ratio a month or so ago when they silently dropped their MM account rate by 30 bps and I immediately pulled out all the funds on deposit. Glad to help them. Fortunately I monitor all the rates on accounts which I have open in real time so I get immediate notice when they change.
  |     |   Comment #4
PD: I trust you withdrew your funds with the same stealth and silence with which they lowered their MM rates. On a serious note, while financial institutions may lose customers by lowering their deposit rates and becoming uncompetitive; they will also lose customers by lack of transparency.
  |     |   Comment #5
Well said kc and you are absolutely right. It is not good customer relations to have a rate cut of that magnitude without informing your customers.
  |     |   Comment #6
A rate cut in this context makes me wonder about their solvency and if they are on the watch list.
  |     |   Comment #10
Presidential is rated "A-" by Weiss which is a very high rating for them as Weiss is so stringent.
  |     |   Comment #7
Regarding transparency to customers, kudos to Alliant FCU. They're not currently a market leader on liquid rates but are not too far behind, and I use them mainly for other reasons. However, as I recall they've not only given me prior notice of rate drops, but usually planned such rate drops to end symmetrically, at the end of a monthly statement as opposed to in the middle of it.
  |     |   Comment #8
Holy Cow!

Just got back from grocery shopping. Prices on most of the stuff I buy have not increased at all in at least 5 years. Now every time I go in they are up another 10-20% ! A lot of the stuff is up even more than that in the last few months. Inflation is out of control, but clearly disconnected from savings rates.

If that isn't evidence that the standard of living for savers is declining, I don't know what is.
  |     |   Comment #9
Here's an idea - those packets of Raman noodles are still affordable at about 20 cents per. They're filling - plus, if you buy lots and let them sit for a few months they become almost brick-like and can be used for a build-it-yourself igloo. Which will be useful since housing prices are skyrocketing as well...
  |     |   Comment #11
111: I wish I were a venture capitalist; I would buy into your ramen house igloo idea. I wonder if they are eligible for VA loans? PD: Other than fresh foods, we still buy most of our groceries online from Amazon, Walmart, and Kroger. I find prices still competitive there. The one thing that seems consistently higher at stores is prices for raw meat.
  |     |   Comment #12
Good one 111!

Ramen noodle futures, that's where your money maker is now.

Where I am very few groceries I bought have not had price increases. I am in the fortunate position that food is only a small percentage of my budget. But I can't imagine what people on the margins are going through or help thinking about how much worse it is about to get for them if this agenda piles on even more inflation.

No offence intended with my "**** Cow!" comment kc! :) It worked in India! :D
  |     |   Comment #14
@#12: Wow, food is only a small percentage of your budget. For me, not including taxes, it's the largest weekly cost.
  |     |   Comment #15
Milty - Wow, looks like you may be a candidate for my inexpensive Ramen noodle igloo idea. If things get too bad, you could always eat yourself a couple of windows...

But not to worry. If the $3.5 trillion boondoggle bill passes, I'm sure it'll contain billions for plenty of taxpayer-funded "igloo navigators".
  |     |   Comment #16
Milty …Buy wine separately
  |     |   Comment #13
What's "up another 10-20%" since you last bought it. PD? Be a bit specific, rather than your typical empty hyperbole.
  |     |   Comment #18
What did you buy and how much were those items before?
  |     |   Comment #17
I see prices going up and package sizes going down. Just noticed Tuna went from 5oz to 4 (one of the name brands). I het an off brand that is 5oz that went from $1.15 to $1.25.

Here are some specific price increases I have noticed.

Pint of Ice Cream the was $1.95 is now $2.05.

Mango in package cut $3.99 to $4.29.

Cod Filets 4,99 to $5.29

Block cheese $1.75 to $1.95.

I don't eat meat other than fish but my wife and kids do. None of them eat beef but they eat other meats. Chicken Breasts are on sale often at a $1,99 a pound large packages only now.

Pork Chops no longer on sale for $1.99 but are at $2.49.

Large corn muffins my wife likes went from $4.99 to $5.49.
  |     |   Comment #19
Boston Fed President Eric Rosengren held between $151,000 and $800,000 worth of real estate investment trusts that owned mortgage backed securities. He made as many as 37 separate trades in the four REITS while the Fed purchased almost $700 billion in MBS.
Fed Chair Jerome Powell held between $1.25 million and $2.5 million of municipal bonds in family trusts over which he is said to have no control. They were just a small portion of his total reported assets. While the bonds were purchased prior to 2019, they were held while the Fed last year bought $21.3 billion in munis, including one from the state of Illinois purchased by his family trust in 2016. Among the very few bonds the Fed bought last year was one from the State of Illinois.
Richmond Fed President Thomas Barkin held $1.35 million to $3 million in individual corporate bonds purchased before 2020. They include bonds of Pepsi, Home Depot and Eli Lilly. The Fed last year opened a corporate bond buying facility and bought $46.5 billion of corporate bonds.
  |     |   Comment #20
Mak - I'm not sure I understand your point in Comment #19. Every single investment that you state a Fed member owns is either a fixed-income investment, or an instrument (like a REIT) that is based on underlying fixed-income investments. Now, one of the most common complaints by users of DA.com is that the Fed should raise rates from their historically low levels. Yet, the Fed has not raised rates.

I would be far more concerned if you'd listed a series of stocks, stock-based ETFs or mutual funds, etc., owned by Fed members. It's at least arguable that low rates help those type of investments, far more than currently-purchased fixed-income investments, and in most cases more even than older fixed-income investments purchased back when rates were higher.

If your point is that Fed members should be prohibited from owning ANY investments, fixed-income or otherwise, then certainly that same prohibition should be extended to those in the executive, legislative and perhaps even judicial branches of government - which also have considerable impacts on the economy. That would be pretty tough to mandate.
  |     |   Comment #21
Yep, no conflict of interest there...:)

Rosengren has announced he would sell his individual positions and stop trading while he is president. Dallas Fed President Robert Kaplan, who actively traded millions of dollars of individual stocks, also said he would no longer trade and would sell his individual positions. But he said his trade did not violate Fed ethics rules.
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Federal Reserve, the Economy and CD Rate Forecast - August 10, 2021

The stronger-than-expected jobs report that came out on Friday was good news that should keep the Fed moving towards tapering its asset purchases, which is the first step in the long road to Fed rate hikes. On Monday, a couple of the regional Fed presidents were suggesting that tapering is a possibility as early as this fall. In an interview with AP, Boston Fed President Eric Rosengren had this to say (via AP News):

It should be noted that Rosengren is considered a Fed hawk who won’t be a voting FOMC...

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