{"id":361551,"date":"2021-11-02T20:38:00","date_gmt":"2021-11-02T17:38:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/the-fed-5-things-to-watch-for-when-fed-meets-wednesday\/"},"modified":"2021-11-02T20:38:00","modified_gmt":"2021-11-02T17:38:00","slug":"the-fed-5-things-to-watch-for-when-fed-meets-wednesday","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/the-fed-5-things-to-watch-for-when-fed-meets-wednesday\/","title":{"rendered":"#The Fed: 5 things to watch for when Fed meets Wednesday"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a328087ac736\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a328087ac736\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/the-fed-5-things-to-watch-for-when-fed-meets-wednesday\/#Transitory_inflation\" >Transitory inflation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/the-fed-5-things-to-watch-for-when-fed-meets-wednesday\/#Rate_hikes\" >Rate hikes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/the-fed-5-things-to-watch-for-when-fed-meets-wednesday\/#Balance_sheet\" >Balance sheet<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/the-fed-5-things-to-watch-for-when-fed-meets-wednesday\/#Ethics_concern\" >Ethics concern<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/the-fed-5-things-to-watch-for-when-fed-meets-wednesday\/#Second_term_for_Powell\" >Second term for Powell<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/the-fed-5-things-to-watch-for-when-fed-meets-wednesday\/#Greg_Robb\" >Greg Robb<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#The Fed: 5 things to watch for when Fed meets Wednesday<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\">\n<\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\" role=\"region\" aria-label=\"article body\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000470208\" role=\"document\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000470208\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       The headlines of the story about Wednesday\u2019s Federal Reserve policy meeting have already been written. The devil, as they say, will be in the details.<\/p>\n<p> On the likely <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>, it is a \u201cforegone conclusion\u201d  the Fed will announce Wednesday that a tapering of asset purchases will begin later this month, according to Michael Gapen, chief U.S. economist at Barclays.<\/p>\n<div class=\"paywall\">\n       Read: Fed seen announcing start of taper<\/p>\n<p>The Fed has  indicated the pace of reduction in its bond buying program is likely to be $15 billion per month. This means that the current pace of $120 billion in monthly asset purchases will end completely in the middle of next year.<\/p>\n<p>Here\u2019s a look at what else economists and investors will be watching for when the Fed concludes the two-day meeting on Wednesday. The Fed will release a statement at 2 p.m. Eastern and Fed Chairman Jerome Powell will hold a press conference at 2:30 p.m. Eastern.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Transitory_inflation\"><\/span>Transitory inflation<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>A lot has been written about Powell\u2019s view that inflation is \u201ctransitory,\u201d which doesn\u2019t mean it will quickly reverse. Instead, it means that within a reasonable timeline, inflation will revert to its 2% target,\u201d says Tim Duy, chief U.S. economist at SGH Macro Advisers.<\/p>\n<p>The Fed\u2019s statement in September said that \u201cinflation is elevated, largely reflecting transitory factors.\u201d and economists are divided over whether it will be included in the statement released Wednesday.<\/p>\n<p>Michelle Meyer, head of U.S. economics at BofA , thinks this key sentence will be edited so that it says \u201cpartly\u201d reflecting transitory factors or a sentence is added about signs of more persistent inflation.<\/p>\n<p>Jim O\u2019Sullivan, chief U.S. macro strategist at TD Securities, thinks the Fed will stick with the \u201clargely reflecting transitory factors\u201d language. This will imply no rush for interest rate hikes, he said.<\/p>\n<p>The underpinnings of the \u201ctransitory\u201d prediction are staring to \u201close its luster,\u201d said  said Steve Friedman, senior macroeconomist at MacKay Shields, in an email. Inflation is looking more broad based, with shelter costs and a broader range of goods and services now registering price increases,  he said.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>The Fed\u2019s favorite inflation gauge, the personal consumption expenditure price index, rose at a 4.4% annual pace in October,  the fastest pace in thirty years. In addition, wages had the largest quarterly increases since the early 1990s. <\/p>\n<h6><span class=\"ez-toc-section\" id=\"Rate_hikes\"><\/span>Rate hikes<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Powell is likely to  emphasize again that the decision to taper is independent from the decision to lift rates. But markets won\u2019t pay much attention to those efforts, said Gapen of Barclays, in an note.<\/p>\n<p>Markets continue to price in about two quarter-point rate hikes in 2022 and see the Fed transitioning quickly from ending asset purchases to raising short-term interest rates. <\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetMediaIllustration\n            inline\n  article__inset\n          article__inset--type-InsetMediaIllustration\n            article__inset--inline\n  \"><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-inline\n        article__inset__image\n      \" itemscope itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<div style=\"padding-bottom:56.714285714285715%;\" data-subtype=\"photo\" class=\"image-container  responsive-media article__inset__image__image\">\n        <img decoding=\"async\" srcset=\"https:\/\/images.mktw.net\/im-427685?width=540&amp;size=1.7630853994490359 540w, https:\/\/images.mktw.net\/im-427685?width=620&amp;size=1.7630853994490359 620w, https:\/\/images.mktw.net\/im-427685?width=639&amp;size=1.7630853994490359 639w, https:\/\/images.mktw.net\/im-427685?width=700&amp;size=1.7630853994490359 700w, https:\/\/images.mktw.net\/im-427685?width=700&amp;size=1.7630853994490359&amp;pixel_ratio=1.5 1050w, https:\/\/images.mktw.net\/im-427685?width=700&amp;size=1.7630853994490359&amp;pixel_ratio=2 1400w, https:\/\/images.mktw.net\/im-427685?width=700&amp;size=1.7630853994490359&amp;pixel_ratio=3 2100w\" sizes=\"(max-width: 639px) 100vw, (max-width: 979px) 620px, (max-width: 1299px) 540px, 700px\" src=\"https:\/\/images.mktw.net\/im-427685?width=700&amp;height=397\" alt=\"\" title=\"\"><\/div><figcaption class=\"wsj-article-caption article__inset__image__caption\" itemprop=\"caption\"><\/figcaption><\/figure>\n<\/div>\n<p>       In September, the Fed was evenly split over whether to raise rates next near and many Fed officials have signaled they want to end tapering in case rate hikes are needed, he said.<\/p>\n<p>Michael Gregory, deputy chief economist at BMO Capital Markets in Toronto said he expects \u201cwe\u2019ll still come away with the impression that the chances of liftoff later next year have moved much higher than the 50-50 odds portrayed by last meeting\u2019s dot-plot.\u201d<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Balance_sheet\"><\/span>Balance sheet<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>In 2016, some economists argued that the Fed should start to actually shrink its balance sheet before it raises interest rates. The central bank didn\u2019t follow that <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roach but the argument is resurfacing again, said Mark Cabana, rates strategist at BofA Securities. Some Fed officials, including St. Louis Fed president James Bullard, have signaled a willingness for an early move to shrink the balance sheet, which has risen to $8.6 trillion from $4.4 trillion prior to the pandemic. <\/p>\n<p>Cabana said his base case is that the Fed follows the approach of the last cycle in 2017-2019 and moves to reduce the balance sheet once its benchmark rate is above 1%, which he pencils in to happen in the fourth quarter of 2023. <\/p>\n<p>But there are rising odds for an earlier move \u2013 in early 2023 \u2013  to shrink the balance sheet as it would be a more passive policy tightening that gives the labor market longer to heal. he said.<\/p>\n<p>To shrink the balance sheet, the Fed doesn\u2019t have to sell securities that it holds. It can just let them mature and not reinvest the proceeds.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Ethics_concern\"><\/span>Ethics concern<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Powell is going to be asked about ethics concerns related to Fed officials trading for their personal accounts during the pandemic. Last month, the Fed announced new rules to restrict trading by top officials. Two regional Fed presidents left their positions after their trading behavior in 2020 was criticized. Some progressive Democrats have questioned some of Powell\u2019s own investment decisions, as well as decisions by his No. 2, Vice Chairman Richard Clarida. \u201cWe expect the Fed Chair to take time to explain the new procedures and push back against the perceptions that Fed officials were engaged in a form of self-dealing,\u201d Gapen said.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Second_term_for_Powell\"><\/span>Second term for Powell <span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Powell\u2019s term as Fed chair ends early next year and some economists believe that Powell\u2019s hands are tied as long as President Joe Biden hasn\u2019t acted to reappoint him.<\/p>\n<p>\u201cHe cannot start to be Mr. Tough Guy [on inflation] as long as his reappointment is hanging in the balance,\u201d said Robert Brusca, chief economist at FAO Economics.  He added the Fed is under \u201ckind of crazy pressure\u201d from progressives. \u201cI think that\u2019s a really big complication for policy right now.\u201d<\/p>\n<p>At his last press conference in September, Powell demurred from making any statement on the matter. \u201cI think the phrase goes \u2013 I have nothing for you on that today. Sorry, I\u2019m just focused on my job,\u201d he said.<\/p>\n<p>The yield on the 10-year Treasury note<br \/>\n        TMUBMUSD10Y,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.000%\" channel=\"\" class=\"\">1.548%<\/bg-quote><br \/>\n       has risen to over 1.5% from low readings below 1.2% in late August. <\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author mobile-scrim hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Greg Robb\",\"subhead\":\"The Wall Street Journal\",\"list\":[{\"type\":\"link\",\"icon\":\"bio\",\"url\":\"https:\/\/www.marketwatch.com\/topics\/journalists\/greg-robb\",\"text\":\"Biography\"},{\"type\":\"link\",\"icon\":\"twitter\",\"url\":\"https:\/\/twitter.com\/grobb2000\",\"text\":\"@grobb2000\"},{\"type\":\"link\",\"icon\":\"email\",\"url\":\"http:\/\/www.marketwatch.com\/news\/mailto:grobb@marketwatch.com\",\"text\":\"grobb@marketwatch.com\"}]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Greg_Robb\"><\/span>Greg Robb<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-772C-C0679FAF6EDD%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;#The Fed: 5 things to watch for when Fed meets Wednesday&#8221; The headlines of the story about Wednesday\u2019s Federal Reserve policy meeting have already been written. The devil, as they say, will be in the details. On the likely news, it is a \u201cforegone conclusion\u201d the Fed will announce Wednesday that a tapering of asset&#8230;<\/p>\n","protected":false},"author":1,"featured_media":361552,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.mktw.net\/im-246534\/social","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-361551","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/361551","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=361551"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/361551\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/361552"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=361551"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=361551"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=361551"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}