On the July FOMC

No new policy initiatives, which we take as both the right move and a sign of confidence. The extraordinary lending facilities and swap-lines have been extended to year-end, but Powell noted that their uptake was less than expected because markets started working again. The FOMC statement acknowledges the upswing in economic activity. But it adds a new sentence arguing that the course of the recovery is in the hands of the virus, not economic actors. Powell emphasized this in the press conference, acting as though new lockdowns would be an inevitable and unquestionable consequence of virus flare-ups. He seems unaware of increasingly accepted statistical evidence that the March/April lockdowns didn’t help, and the revealed behavior of officials who have done little in response to the sunbelt flare-ups. He’s not in charge of public health policy, but we’ll bet that the media uses his statements to stoke fears and encourage lockdowns.