Feb 20, 2019

The Fed's newly unified voice

Federal Reserve Board Chairman Jerome Powell. Photo: Alex Wong/Getty Images

Statements from Fed governors and regional presidents had often been calibrated based on an individual member's perceived hierarchy within the rate-setting Federal Open Market Committee (FOMC) and their dovish or hawkish leanings. And often they were outright ignored because only the chair's views were seen as important to the market.

Driving the news: But under Jerome Powell, the Fed has bucked that trend. Remarks by FOMC members have been largely in one unified voice. New York Fed President John Williams said Tuesday U.S. interest rates are already about neutral and it would take some sort of shock to raise them. That came days after Fed Gov. Lael Brainard said the U.S. central bank should stop reducing its balance sheet by late this year.

Why it matters: Brainard and Williams appeared with Chairman Jerome Powell in Bloomberg's profile of "The Fed's nucleus" earlier this year, and are both making the case for an even more dovish Fed.

  • But even remarks by FOMC non-voting members like Atlanta Fed President Raphael Bostic have become remarkably indicative of what's to come.

Details: The first sign that there had been a sea change in the Fed's plans for 2019 came from Bostic on Jan. 7 when he projected just one interest rate increase for the year, saying his business contacts seemed less confident about the coming months, and that "clouds" had developed overseas.

  • Those comments were largely ignored at the time — Powell had signaled 2 rate hikes for 2019 at the December FOMC conference just weeks before. But they now look prescient — or calculated.

The big picture: As recently as November, the Fed had clearly articulated a plan to raise interest rates 3 times this year and to reduce its balance sheet by $50 billion a month, on "automatic pilot." That would have pulled U.S. interest rates to 3.00–3.25% and reduced balance sheet holdings to around $3.5 trillion. Those numbers are much closer to normal interest rates and balance sheet holdings throughout the Fed's history.

Be smart: The lower interest rate could be reflective of the lack of inflation currently in the economy, but the increased level of debt held by the Fed on its balance sheet suggests policymakers still feel the need to stimulate what Williams on Tuesday called an economy "in a very good place."

  • That's not how this is supposed to work.

Don't forget: The Fed isn't just holding $4 trillion in U.S. Treasuries and mortgage debt, it's actively buying new debt to replace bonds that mature.

  • In his remarks earlier Tuesday, Williams said he expects the Fed to continue reducing its balance sheet this year.

Go deeper: "No one believes the Fed" on interest rates

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U.S. coronavirus updates: New York reports record 630 deaths in 24 hours

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

New York reported 630 new deaths in 24 hours, Gov. Andrew Cuomo said Saturday — an "all-time increase" that beat the previous day's record of 562 deaths in one day.

The big picture: As expected, COVID-19 death tolls are rising in the U.S., killing more than 7,100 people in total, and over 1,000 in 24 hours alone. The CDC is recommending Americans wear face coverings in public to help stop the spread, marking a significant change in messaging from the Trump administration.

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Coronavirus dashboard

Illustration: Axios Visuals

  1. Global: Total confirmed cases as of 10 a.m. ET: 1,139,207 — Total deaths: 60,874 — Total recoveries: 233,807Map.
  2. U.S.: Total confirmed cases as of 10 a.m. ET: 278,537 — Total deaths: 7,163 — Total recoveries: 9,920Map.
  3. Public health latest: The CDC is recommending Americans wear face coverings in public to help stop the spread of the coronavirus. The federal government will cover the costs of COVID-19 treatment for the uninsured, Health and Human Services Secretary Alex Azar said.
  4. 2020 latest: "I think a lot of people cheat with mail-in voting," President Trump said of the 2020 election, as more states hold primaries by mail. Montana Gov. Steve Bullock said Friday that every county in the state has opted to expand mail-in voting for the state's June 2 primary.
  5. Business updates: America's small business bailout is off to a bad start. The DOT is urging airlines to refund passengers due to canceled or rescheduled flights, but won't take action against airlines that provide vouchers or credits.
  6. Oil latest: A pivotal Monday meeting among oil-producing countries to discuss supply curbs is reportedly being delayed amid tensions between Saudi Arabia and Russia.
  7. Military updates: Senators call for independent investigation into the firing of Navy captain of the U.S.S. Theodore Roosevelt. The U.S. military is struggling to find new recruits as enlistment stations are shut down.
  8. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

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Coronavirus reshapes American families

Illustration: Eniola Odetunde/Axios

It used to be scarce and hard-earned, but suddenly family time is abundant in the era of shelter-in-place.

Why it matters: For the first time since the early 19th century, many parents and kids — and even grandchildren — are all under the same roof round-the-clock. And if past periods of emergency are any guide, this enforced togetherness could deepen our relationships for years to come.

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