How could Biden reshape the Fed?

Whether President Joe Biden chooses to reappoint Jerome Powell or to nominate Lael Brainard to be the next Fed Chair, it is unlikely in itself to have much impact on the near-term outlook for monetary policy. With up to three other vacancies for Biden to fill, however, the Fed Board is likely to end up at least as dovish as it is now, may adopt a tougher line on financial regulation, and could also take more explicit steps to combat broader issues like inequality and climate change.
Andrew Hunter Senior US Economist
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US Economics Weekly

Omicron reaches plateau, leaving Fed free to hike

We expect the Fed to deliver some heavy hints at next week’s FOMC that it is planning an interest rate hike in March. With the Omicron wave now past its peak nationally, there is little to hold the Fed back, particularly if next week brings news of a further acceleration in wage growth.

21 January 2022

US Economic Outlook

Inflation to remain elevated as GDP growth slows

We expect underlying inflation to remain well above the 2% target this year, which means the Fed will push ahead with four rate hikes even though real GDP growth is likely to disappoint. Core inflation will average 4.3% in 2022 and close to 3.0% in 2023. GDP growth will slow to 2.7% this year and 2.0% in 2023.

20 January 2022

US Fed Watch

Will Fed signal that March rate hike is coming?

With many Fed officials now either explicitly supporting, or at least “open to”, an interest rate hike in March, we would expect to see some acknowledgement of that in the statement issued after the upcoming January FOMC meeting next week or, at the very least, when the minutes are released three weeks later. Overall, we expect four 25bp rate hikes this year and, since core inflation is likely to remain well above the 2% target, an additional four rate hikes next year, which would take the fed funds target range to between 2.00% and 2.25% by end-2023.

19 January 2022

More from Andrew Hunter

US Data Response

Employment Report (Jul.)

The stronger 943,000 rise in non-farm payrolls in July and upward revision to previous months’ gains indicates that employment growth has shifted into a higher gear and that the drag on hiring from labour shortages is easing. That suggests economic growth may be holding up better than we had feared and leaves open the possibility of Fed Chair Jerome Powell dropping a stronger hint that tapering is on the way at Jackson Hole in three weeks’ time.

6 August 2021

US Employment Report Preview

Payroll growth to remain elevated

With labour supply continuing to lag the recovery in demand, we estimate that growth in non-farm payrolls slowed to 650,000 in July.

 

29 July 2021

US Data Response

Durable Goods (Jun.)

The June durable goods data were a little weaker than we had expected, but the further rise in underlying orders suggests that business equipment investment growth is slowing only gradually.

27 July 2021
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