Fed day and Congress looks for holiday exit
- Fed’s FOMC makes rate decision Wednesday
- Final week of Congress for 2023
- Action on budget unlikely as first deadline 1/19 looms
- Crunch days for Israel/Ukraine/border bill
- Zelensky comes to DC
Tuesday and Wednesday the Fed’s Federal Open Markets Committee (FOMC) has its final meeting of the year to decide what action to take on interest rates. As usual the Fed will issue its official release at 2pm, and Chair Powell will have his press conference at 2:30pm. It is widely expected that the Committee will continue their pause in rates. Comments by the Chair and other Fed officials have done nothing to suggest any other decision.
While rates are likely to be held steady, I would be surprised if the central bank’s statement takes a victory lap but makes clear that they are data dependent at each meeting as the New Year begins. Their next meeting will be on January 30/31.
The past FOMC decisions have been unanimous, and the Chair has pointed this out at his pressers. I believe he will work hard to maintain the Committee’s unanimity. There are likely a few “hawks” who will need some cautionary language in the official announcement and will want caution reflected in the minutes that are released in three weeks. Chair Powell will be thinking of these hawks, and the need to keep them on board as he speaks to the press after the meeting.
Congress
As I have joked before Congressional staff often teases that the jet fumes from Reagan Airport seem to energize Members of Congress to head home. Both House and Senate have indicated that they would like to wrap up the 2023 session by the end of this week.
It is unlikely that either body can make any headway on the 12 government budgets. The two-tiered deadlines of January 19 and February 2 are lightyears away on the Congressional calendar. The one related item that is being discussed is a topline number of what Congress agrees to spend collectively on all 12 budgets.
There appeared to be an acceptance by some conservative Republicans to have a topline number of $1.5T that was part of the debt ceiling increase negotiated between former Speaker Kevin McCarthy and President Biden. The conservative Republicans may accept the top line number to allow staffs to work on the budget during the holiday break, but many of these same Republicans want to push back on spending in non-defense departments that range from Agriculture food programs to Transportation rail programs.
The departure of McCarthy and the removal of Santos will mean that Republicans will start the new year with a razor thin three seat majority. This is going to make life very tough for Speaker Johnson as he tries to move spending bills through the House. At this point it seems at least 50/50 that there will be government shutdowns beginning at the first deadline of January 19.
Ukraine/Israel/border
The final week before the hoped-for holiday break will likely be dominated with the President’s Supplemental Spending Bill containing $106B in spending largely for Ukraine and Israel. On Sunday it was announced that Ukrainian President Zelensky is coming to DC to meet with the full Senate, Speaker Mike Johnson, and President Biden.
The Senate meeting is to be co-hosted by both Schumer and McConnell demonstrating that the Ukraine spending has bipartisan support. However, there is growing Republican opposition, especially in the House. Republicans who are committed to support for Ukraine have coalesced around the idea that Congress needs to deal with the crisis at the Southern Border and that this idea should be part of the Supplemental.
Both sides have been talking over the weekend but currently there appears to be no border breakthrough. While both sides agree that more money is needed, Republicans want to clamp down on asylum seekers, and return those who don’t have legal status back to their countries of origin. This is difficult for some Democrats to accept, but others realize with tough races for Democrats in blue states they need to find ways to deal with the issue. The Supplemental may provide the chance, but the clock is ticking and there appears to be a deadline of week’s end. Maybe the Zelensky visit will help bring about a resolution.
More from the author
Articles Read 1/2
🎁 Unlock 1 extra article by joining our Community!
Stay up to date with the latest articles. You’ll even get special recommendations weekly.
Already have an account? Sign In 4123ab-cdfb9a-a9a4c0-de2388-31a36f
Already have an account? Sign In 4123ab-cdfb9a-a9a4c0-de2388-31a36f
