Afraid of “crying Wolf” once too many

From the News:

Don’t bet on the Federal Reserve blinking again.

U.S. central bankers appear to be on course to raise interest rates twice more this year and remain confident in their forecast for growth of around 2 percent despite a series of weak first-quarter reports.

That’s a shift from past performance, when they backed away from projected rate increases in the face of unexpected headwinds. Now, the bar for delay is higher.

Seven weeks ago, we wrote, “The Fed is fed-up with foot-dragging”, something the linked Bloomberg piece confirms.

The Fed does not realize that it´s the data that is Fed-dependent, not the other way around. Therefore, it´s not surprising that the first quarter data were in many cases disappointing, waiting for confirmation from the very low expectation for first quarter GDP growth.

The more the Fed “sticks to its guns”, the weaker the economy will become!


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