Volcker Dies as Inflation Comes Back to Life – Ep. 520

Fed: Interest Rates on Pause
Today the Federal Reserve had its last official meeting of the year. And, as was widely expected, the Federal Reserve was unanimous in their decision not to cut interest rates. They didn't even consider hiking interest rates, but they decided not to cut them any further for now. So, they're on a pause.  The short-term rates are now 1.5%. The target is 1.5% to  1.75%, and the idea is that the Fed is going to remain there for some time.  Now, I don't really think it is going to be that long before they cut rates.
Fed Will be back to Rate Cutting Soon
I was on Fox Business earlier today with Liz Claman, and Liz asked me when I thought they were going to cut rates in 2020. I said, I don't know the exact meeting,  that they're going to choose to do it.  I think a lot of it depends on what's happening with the stock market. As soon as the stock market starts to sell off, if that's what happens, I think that could motivate the Fed for the next rate cut. And maybe, if we get enough bad economic data, the Fed might move for that reason. But whatever the reason is going to be, whatever the excuse they're going to make up, the Fed is not done cutting. I don't think they will pause until 2021 or later, as a lot of people seem to believe.  I think the Fed is going to be back in the rate cutting business much sooner than that.
The November deficit: $2o9 Billion
Of course, the quantitative easing business - that's not going to stop. They're going to continue to expand their balance sheet and print money so that they can prop up the bond market and prop up the stock market and prop up the government.  So that is going to continue.  In fact, we got the official budget deficit released, I guess at about the same time as we got the Fed decision.  The November deficit: $2o9 billion.  We've not got two months into this quarter and the deficits are running much higher than they were earlier, so even though the economy is supposedly getting better, the deficits are getting bigger.

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