With the US equity market jerking around on every headline (having jumped on DOE inventories?!), reports from MNI that the FOMC majority is not prepared to wait indefinitely for market participants to be fully on board, appear to have taken the shine off the exuberance. It seems yesterday’s warning from Jerome Powell that there will be 2 rate hikes this year did not stall the stock bubble enough and so more “officials” leaked more information today.
As MarketNews reports, Fed officials have let it be known they realize they can’t avoid all volatility and are prepared to move when they believe they have met two main conditions for “liftoff.”
The Deutsche Boerse publication notes that the Fed has done everything it can to facilitate communication with markets, “including FOMC statements, press conferences, quarterly economic forecasts, Congressional testimony and speeches by key policymakers” to convey how the Fed perceives progress toward fulfilling the two conditions.
However, MNI is told the FOMC majority is not prepared to wait indefinitely for market participants to be fully on board.
MNI had previously reported on May 14, that Fed officials are highly sensitive to financial markets but are determined not to be ruled by them. “As much as the Fed would like to be in sync with markets and avoid excessive volatility, there is a sense it cannot be cowed by the markets into indefinitely delaying liftoff.”
Needless to say, for now the Fed has been all talk and no hike, and any claims it won’t be “cowed” by markets are nothing more than a sad joke and proof of just how cornered the Fed is by the very asset bubble it itself has blown.