As the dust settled on the frantic weekend that dismantled Silicon Valley Bank and Signature Bank, Federal Reserve policymakers confronted a radically altered macroeconomic calculus ahead of their March FOMC meeting.
When the Federal Reserve published its weekly H.4.1 balance-sheet release on Thursday, 16 March, the numbers confirmed the staggering scale of the banking system’s emergency triage.
Jerome Powell’s semi-annual monetary policy testimony before the Senate Banking Committee was an unsparing rhetorical reset.
Financial markets have spent the past eighteen months engaged in an unrequited romance with Federal Reserve rate cuts.
The December consumer price index confirmed that headline US inflation is descending from its summer summit, printing at 6.5 per cent year-on-year.
The Federal Open Market Committee raised the benchmark policy rate to a range of 4.25 to 4.50 per cent in December and published a Summary of Economic Projections that penciled in a terminal rate of 5.1 per cent for 2023.
As the Federal Open Market Committee gathers for its November policy deliberations, interest rate futures are pricing a fourth consecutive 75-basis-point increase, bringing the policy rate to 3.75 to 4.00 per cent.
The Federal Open Market Committee's Summary of Economic Projections is designed to project institutional consensus and anchor market expectations.
Central bankers like to project an image of omnipotent precision, as though adjusting the cost of overnight money can recalibrate every price tag in the modern economy.
There is an unspoken economy in monetary policy that central bankers rarely acknowledge in formal testimony: the sheer convenience of panic.
