Fed adopts surprisingly dovish stance


Bob Baur, Chief Global Economist, Principal Global Investors, comments on the latest FOMC statement…

The FOMC statement confirms our expectation that there would be no rate hikes in 2019.
 
A key takeaway from the FOMC statement is that the Fed doesn’t want to raise rates above neutral. The potential for no further rate hikes in 2019 suggests the Fed doesn’t have to slow the current growth rate of the economy.
 
With a big change in direction in January’s meeting and a roaring market, I’m surprised at how dovish a position the Fed took. The jobs market is hot with wages rising at a solid year-over-year rate. We might see the longest expansion in history if we maintain this level of growth through July.
 
Letting the economy be is nirvana for emerging markets, especially Asia. The slower the better for Asian markets who benefit from a weaker dollar and lower interest rates. China seems to be stabilizing with growth still surging, which is a positive development for that region and other emerging markets.
 
 

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