The Federal Reserve is on the verge of a credibility problem: the market does not believe the central bank at its word.

Let us rewind: at the January 30, 2019 Fed meeting, the central bank wavered on its 2015 – 2018 interest rate hike campaign and began to hint that it would at least pause for the intermediate-term on further increases. This was a significant departure from the 2015 – 2018 period, which saw rates rise from zero to the present 2.25% – 2.50% in three years.

Specifically, the new language used by the Fed at the January meeting stated: “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes…

Read Full Article