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The Fed’s Open Market Committee (FOMC) is meeting this Wednesday and it is starting to resemble an episode of the TV show “House.” Much speculation for 55 minutes, then Dr. House announces the correct diagnoses. Same as the FOMC, but since 2008 there has been lots of speculation and jawboning about a rate hike, then … nothing happens. At least until after the upcoming Presidential election.
As of this morning, there is seemingly little chance of a Fed rate hike for either the September or November meetings. But for the December meeting, the probability of a rate hike rises to 55.5%.
But the future paths changed compared to previous futures paths. Today, investors in Fed Funds Futures are pricing in a decline in The Fed Funds Target rate for July 2017. A small chance to be sure, but nonetheless someone is betting on a decline.
We have had one Fed rate change since early December 2008 and only 1 rate hike since The Fed last raise rates in June 2006.
There has not been many dissents during Yellen’s term as Fed Chair. Only Bernanke has experience fewer dissents since the reign of Arthur Burns. The most dissents? G. William Miller, Carter’s choice for Fed Chair … and Treasury Secretary. Of course, Miller had troubles taming inflation (although Arthur Burns suffered inflation problems as well).
Gerald Ford even resorted to an ad campaign to cool off inflation called “Whip Inflation Now!” He even hired the composer of the musical “The Music Man,” Meredith Wilson, to compose the tune. Unfortunately, I cannot find the embarrassing film of Meredith Wilson singing “Whip Inflation Now” while playing the piano. But they had buttons and t-shirts!
And substantial inflation until Paul Volcker was appointed Fed Chair.