Weekly Signal & Noise Filter
Post-Fed Recap
“Powell has a zillion really good PhD economists slicing and dicing the data, and if they’re telling him Jan/Feb uptick is mostly noise, we should all take that on board.”
@greg_ip (Chief Economics Commentator, Wall Street Journal)
The Fed has embraced the position, championed by these pages, that the January and February inflationary impulse was most likely seasonal and does not currently represent a threat to anchored expectations.
Updates to the Summary of Economic Projections (SEP) reveal an accommodative monetary policy lean: upwardly revised GDP and core PCE, whilst keeping 3-cuts on the table, representing a dovish shift.
Recall, the SEP is not a forecast per se, but rather a statement of intent. The levels and targets embedded in the SEP reveal the intentions, aspirations, and revealed preferences of policy makers for the growth and inflation matrix given the current opportunity set and the tools at their disposal.
The signal value in the SEP is in what policy makers are reaching for within the possible.
What policy makers are reaching for, what they are telling us, is the following: