As I wrote Wednesday morning prior to Fed chief Jay Powell’s announcement of standing pat on Fed funds rate.
Stocks and the gold price took off on the news that the Fed statement took all the language out of their plan to look at raising rates, due to recessionary fears. The Fed is currently at 2.5% on the rate.
What does this mean? Well appears that Powell & Co. may have overshot — once again — restraining lending too much and may put the US economy into negative reading on growth.
As I wrote at the time, the December rate hike was not needed since the Fed had already taken much of the air out of the economy through pricking the asset bubble in stocks.
Now due to the government shutdown we will not get our first reading of fourth quarter growth, which would normally be out Thursday, until later on in the month. However the Fed probably had a good read on that GDP number, which is probably below 2% growth.