Some interpreted Powell’s statement to mean more QE. There’s a strong clue Powell meant something else. OK, but ….
What did Powell Mean?
I confess, I thought Powell was talking about QE, but I did not see the exact quote. Powell said “organic growth”.
I believe Coppola has the correct intent.
Intention vs Reality
However, Coppola’s point is mostly moot.
What the Fed thinks it will do and intends to do, typically miss the mark badly on what it actually does.
The Fed “intended” to dramatically shrink its balance sheet. Look what happened.
Look at a Dot Plot of interest rate expectations from 2017.
Dot Plot December 13, 2017
Fade This Consensus
That was my precise comment at the time.
Some FOMC participants actually believed the Fed would hike to over 4.0% by 2020 (next year!). The majority believed rates would be over 3.0%.
Fed’s Intended Meaning
The Fed may do a brief period of “organic” expansion (which by the way can mean anything the Fed wants), but I propose more QE is coming whether the Fed “intends” to do so or not.
By the way, we really do not know what the Fed “intended”. Perhaps the the Fed wanted to open the door for more QE later but without alarming the market of that.
Mike Shedlock,/ Mish is a registered investment advisor and a though leader on economics and finance. His “MishTalk” global economics blog is highly read and he posts several articles daily on the global economy. Topics include interest rates, central bank policy, gold, precious metals, jobs, and economic reports from an Austrian Economic perspective. Follow Mish on Twitter or email him.