If growth is low, it’s always transitory

The FOMC Statement for May showed up some contradictions in Fed policy. They have made it clear that they think the economy is growing modestly above trend. Hence, we still get rate rises, projections for more rate rises, plus the chatter about shrinking the balance sheet. The Fed really do seem to be watching RGDP on an annualized QoQ growth basis, which is slightly insane when one is looking for trends. A YoY basis makes much more sense. However, who are the markets or we to question what the Fed looks at. They decide, and the markets and we have to follow…

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