Depending upon how you view the Federal Reserve, today’s policy meeting and attendant economic projections along with the press conference that followed by new Fed Chairman Janet Yellen were, collectively, either a stunning success or a dismal failure.
If you’re the financial market or you work on Wall Street, you probably didn’t like what you heard about less money printing and rising interest rates.
That’s why the price of virtually every financial asset went down, some by a lot.
If you’re one of the few Americans who favor a less-involved Fed and have tired of asset bubbles, you probably liked it, though that doesn’t mean to imply that we’re done with asset bubbles.
One thing is certain, the message from the Fed was no”nothing-burger”, as some suggested earlier.
As expected, the central bank left short-term interest rates at the freakishly low rate of 0 to 0.25 percent while it lowered its monthly money printing from $65 billion to $55 billion.
They jettisoned their 6.5 jobless rate target for a more flexible threshold for raising interest rates and were optimistic about the economy improving, but it appears just three words from Ms. Yellen in the press conference were all markets heard – “about six months” – in reference to the time between the end of “tapering” and the start of interest rate hikes.
That puts the beginning of the next Fed “baby-steps” interest rate normalization program sometime next spring (instead of next fall, as previously believed) and that, apparently, was too soon for some traders who chose to hit the sell button sooner rather than later.