The minutes of the first Federal Open Market Committee meeting chaired by Kevin Warsh have been released, and it’s worth taking some time to analyze the priorities signaled in the text. Under the sub-head of “Committee Policy Actions,” the minutes explain that the committee kept rates the same (for the moment), and that the FOMC plans to “maintain ample reserves.” Then the committee notes that inflation is persistent, and follows it up at the end of the paragraph by emphasizing that “the Committee will deliver price stability.” Read the whole paragraph here [YSG’s emphasis added in bold]:
In support of the Committee’s dual-mandate goals, all members agreed to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent and to reaffirm the FOMC’s policy of maintaining ample reserves in the banking system. Members also agreed that the statement would not repeat the language that had suggested an easing bias regarding the likely direction of the Committee’s future interest rate decisions. Members noted that there had been little change in the unemployment rate and solid growth in economic activity, but that inflation remained elevated relative to the Committee’s 2 percent goal. Against this backdrop, members concurred that the postmeeting statement would convey the Committee’s commitment to achieving its dual-mandate goals and emphasize that the Committee will deliver price stability.
Action Line: That’s not the language of a Fed Chairman ready to cut rates to zero to please the president who appointed him. That language echoes Warsh’s subtle ridicule of Jerome Powell’s tenure as chairman and Powell’s failure to contain inflation. Keep your eye on the Fed. Your Survival Guy certainly will be. Click here to subscribe to my free monthly Survive & Thrive letter.
