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b'Eighth Interest Rate Hike
\\nAs expected, the Federal Reserve raised interest rates for the eighth time, today. The rate is now 2 to 2.25 percent, so I guess the midpoint is 2.125%.\\xa0 The move was highly anticipated, of course, even I expected the Fed to raise rates.\\xa0 At this point I had been expecting that for some time ever since the Fed first began raising interest rates it became apparent that they would continue to move rates higher.
\\n"Accommodative" is Out
\\nThe only thing that was potentially significant about this rate hike was the removal of the word "accommodative" by the Fed in their official statement to describe the current state of monetary policy.\\xa0 I initially thought that that was a significant removal of the word.\\xa0 Obviously, the Federal Reserve thinks very carefully about the written statements, so if they chose to remove a word, that was there, and they know that people parse through these words with a microscope.\\xa0 The fact that the word was missing, obviously by intention - it wasn\'t just an accident - that they\'re trying to send a message.
\\nMaybe Neutral?
\\nWhat I first thought the message was, and I still believe that was in fact the message (even if the Fed is trying to backpedal), but that the Federal Reserve views a 2% as neither accommodative nor restrictive.\\xa0 Maybe neutral. The Fed now believes that rates are high enough that they would no longer be described as accommodative.
\\nInterest Still Below Inflation: Negative Rates
\\nMeanwhile, rates are at 2%. Two percent in my mind is still a highly accommodative monetary policy, especially when the annual rate of inflation, even the way the government measures it, is above 2%. That means you still have negative rates of interest. How can you describe negative real rates as anything but accommodative?
\\nPowell:\\xa0 "Don\'t Read Anything Into The Omission of Accommodative"
\\nPowell was specifically asked about the removal of the word accommodative from the statement during the Q&A period that followed the official announcement.\\xa0 Basically, what Powell said was, "Don\'t read anything into the removal of that word".\\n\\nOur Sponsors:\\n* Check out Rosetta Stone and use my code TODAY for a great deal: https://www.rosettastone.com/ \\n\\nPrivacy & Opt-Out: https://redcircle.com/privacy'