On the March FOMC: Dots in the Headlights

The SEP lowered growth estimates, and raised unemployment estimates. Yet the “dot plots” didn’t move, leaving expected rate policy frozen. Inflation estimates were raised, and we learned in the presser it was due to every participant making very specific and elaborate assumptions about the inflationary and anti-growth effects of US tariffs and global retaliation, despite Powell’s repeated claims, indeed language in the statement, that “uncertainty...has increased.” Apparently unable to agree on any adjustment to rate policy in light of threats to both sides of the Fed’s mandate, the monthly redemption cap on Treasuries was cut by 80%, virtually ending quantitative tightening – despite a dissent on that from Waller. The Powell Put is in place, and it is beginning to be deployed.