Fed prepares to move, Congress returns

Key Takeaways

  • FOMC met, took no action, but again telegraphed March increase.  How many increases up to economy: pundits range 4 to 7.
  • Fed policy surprise vs telegraph. Atlanta Fed Pres Bostic poses possible 50bps increase.  Fighting inflation Volcker surprised with increase of 250bps, lots of examples for Powell and team to look at.
  • Congress must deal with February 18 deadline for new federal spending bill.  Talks to continue to reach bipartisan Omnibus Spending Bill to increase funding levels and change priorities.  Afghanistan, Russia and China policies all point to need to change Defense, but Ds will need to see Domestic spending increase in deal.
  • Democrats facing falling poll numbers for Biden look to revised Build Back Better to excite base before midterm Election Day.
  • Putin’s Made In Russia crisis in Ukraine overhangs global politics.

Last week as expected the Fed’s FOMC met and kept interest rates unchanged, but Chair Powell made clear that increases are coming and March is the likely date.  The FOMC will next meet March 15-16.  As I have written Fed Chairs can surprise with rate moves, or telegraph moves to enable market participants to make decisions based on clear readings.  In recent weeks Fed pundits have speculated on how many i...
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