The Fed Has a Commitment Problem

November 05, 2023

by James Rickards Daily Reckoning

This past Tuesday, I offered the following forecast of what would happen at the FOMC meeting this week:

On Wednesday, the Fed will leave its target rate for fed funds unchanged. That decision will keep the federal funds target at 5.50% as set at the July 26, 2023, meeting. Over the course of [13] FOMC meetings beginning March 16, 2022, I’ve been correct in all of my forecasts including the “skipped” rate hikes at the June and September 2023 meetings. I’m confident I’ll be correct on Wednesday also.

The Fed did keep the fed funds rate unchanged as I had projected. At the same time, they warned that rate hikes are still on the table, and they could raise rates again. But they did not offer a date when that might be expected. That makes 14 Fed meetings in a row going back to March 16, 2022, when I got the Fed forecast right.

I don’t say that to brag, it’s just that I know how to interpret what they say beforehand. You just have to know what to look for.