By Scott J. Brown, Ph.D., Raymond James
The Fed’s New Policy Framework in Action – There were no significant surprises following the September 15-16 Federal Open Market Committee meeting. As expected, short-term interest rates were left unchanged and the FOMC did not alter its asset purchase plans. In the Summary of Economic Projections, Fed officials’ projections of growth, unemployment, and inflation were within the range of private-sector economic forecasters, showing a smaller hit to GDP this year, but somewhat slower growth in the next couple of years. The forecast horizon was extended, and most Fed officials (14 of 17) expect no change in rates through 2023. The FOMC incorporated its revised policy framework into the policy statement, but Powell was vague about how it will actually work.
This Week – August home sales are expected to be limited only by supply constraints. Durable goods orders should reflect further aircraft order cancellations and will be subject to seasonal noise in motor vehicles (summer plant closings were more modest this year). Otherwise, orders are expected to show moderate improvement. Fed Chair Powell will testify three times, but his comments are unlikely to be market-moving. The following week will be much more eventful.