Federal Reserve Autopilot Statement
This is the key paragraph from the Federal Open Market Committee (FOMC) statement released by the Federal Reserve at the conclusion of the November 2-3 meeting.
In light of the significant progress the economy has made toward the committee’s goals since last December, the committee decided to begin reducing the monthly pace of net asset purchases by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities. Beginning later this month, the committee will increase its holdings of Treasury securities by at least $70 billion per month. and agency mortgage-backed securities of at least $35 billion per month. Beginning in December, the committee will increase its holdings of Treasury securities by at least $60 billion per month and agency mortgage-backed securities of at least $30 billion per month. The Committee considers that similar reductions in the frequency of net asset purchases are likely to be appropriate each monthBut it is prepared to adjust the pace of buying if the changes in the economic outlook warrant it.
Autopilot is scheduled to be tapered for 7 months
If the declining autopilot continues, it will take 7 months to reach $0.
It is important to note that tapering is not a decrease in the Federal Reserve’s balance sheet, but rather a decrease in the pace at which the Federal Reserve adds to its balance sheet.
Tapering takes autopilot to June.
At that time, the Fed is allegedly ready to raise interest rates. Again, that’s where the Fed started.
Market thoughts on rate hike for June 2022
Market thoughts on rate hikes for December 2022
Please be serious.
Autopilot until December 2022?
Please be serious.
I don’t know how long the Fed can stick to the autopilot message, but I’m willing to bet that the notions that there will be no economic distortions for a year and that the Fed can stick to Autopilot for so long, are both wrong.
This was one of the things that Lacey Hunt and I agreed on in our video interviews.
Part one with themes of Lacey Hunt
- Milton Friedman’s famous statement on inflation
- M2 money supply
- Reverse buy back
- Net government spending is negative for the economy
- Fed rate hike
- slowing economy
Part Two with themes of Lacey Hunt
- Is GDP exaggerated?
- inflation expectations
- economic models
- rate hike forecast
- Margaret Thatcher quotes
Pop or trance?
Lacey and I are also discussing the economic endgame and things that could change his stance on Treasuries.
In case you missed Part 1, please check out MishTalk TV Episode #3: Lacey Hunt Still Bullish on Treasuries
If you missed Part 2, please see MishTalk TV #4 With Lacy Hunt: Is GDP Exaggerated?
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