Fed Chair Powell really couldn’t have been much more aloof when addressing the nation on Thursday.
He really could have just cut to the chase by saying something like, “we’re just going to sit on our hands this year… and probably next year as well.”
Instead, as he tends to do, he used fancy Fed-speak to tell us that any changes to current Federal Reserve policy will come “gradually and with great transparency,” and only after the economy has more fully healed… whenever they decide that’s the case.
Powell said the Fed will reduce its $120 billion monthly bond purchases only after the economy has made substantial progress, and that rate increases won’t be considered until the economy is all but fully recovered, whatever that means.
As expected, the Fed has given us pretty much no parameters on what economic progress they need to see to take any action, because with GDP expected to grow by 6.5% this year and unemployment falling to 4.5%, that sure sounds like enough progress and recovery. And hey, all it cost us was $6 trillion in new government debt and spending and another $4 trillion in newly-printed dollars.
While we learned very little from the Fed meeting this week, it’s growing increasingly certain we won’t see much of anything out of central banks for quite some time. So, with rates looking to sit this low for at least another couple of years, stock investors can let the good times keep rolling.