Less Focus on the Federal Reserve

Less Focus on the Federal Reserve

 

The Federal Reserve held the Fed funds target, which influences short-term interest rates, at 4.25-4.5% last week. Chair Jerome Powell presented a constructive view of the economy, saying “…economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.”

We expect the Fed to remain on hold until they have a reason (e.g. higher inflation or deteriorating growth) to embark on another hiking or cutting cycle. The Federal Reserve has been the belle of the (economic) ball for at least 50 years, but the Trump Administration has flipped that focus for many market participants (Fig. 1) as the administration has been focused on longer-term interest rates, which are not controlled by the Federal Reserve, and driving policy through the Treasury (Scott Bessent) and Commerce (Howard Lutnick) Departments.

Fig. 1: Google search volume, 4-week rolling average

Source: Google Trends, Mill Creek. Janet Yellen and Gina Raimondo were Treasury Secretary and Commerce Secretary for President Biden.

Disclosures & Important Information

Any views expressed above represent the opinions of Mill Creek Capital Advisers ("MCCA") and are not intended as a forecast or guarantee of future results. This information is for educational purposes only. It is not intended to provide, and should not be relied upon for, particular investment advice. This publication has been prepared by MCCA. The publication is provided for information purposes only. The information contained in this publication has been obtained from sources that

MCCA believes to be reliable, but MCCA does not represent or warrant that it is accurate or complete. The views in this publication are those of MCCA and are subject to change, and MCCA has no obligation to update its opinions or the information in this publication. While MCCA has obtained information believed to be reliable, MCCA, nor any of their respective officers, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

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