Adieu, Baby Steps

In a bold non-move today, the Federal Reserve stood pat on interest rates, leaving the fed funds rate at 5.25 percent. After seventeen consecutive increases, the pause is here.

The question now?

Will the pause refresh?

Statements from the last meeting in June and the one just concluded are compared below. Notable differences are the confirmation of an economic slowdown and, more importantly, the removal of the "productivity will restrain wages" refrain as well as a little backpedaling on inflation and expectations thereof.

The change to the wording for inflation expectations is very intriguing - what was previously "inflation expectations will remain contained" has morphed into "inflation pressures seem likely to moderate over time, reflecting contained inflation expectations".

A curious choice of words.



More than anything, it feels like that click-click-click click-click-click sound has just stopped and we are all now moving in super slow motion, sitting blindfolded atop what is certainly the biggest roller-coaster in the world, waiting to see what happens next.