BREAKING: Fed’s Take on World, Inflation Puts March Rate Hike in Doubt
by Joseph Carson, AllianceBernstein
It was no surprise that Federal Reserve officials decided to hold interest rates steady on Wednesday. But what they said about global conditions—and didn’t say about the inflation outlook—leads us to believe they may not pull the trigger in March, either.
The Fed raised rates last month for the first time in nearly a decade. On Wednesday, the rate-setting committee said it was “closely monitoring global economic and financial developments” and is “assessing their implications for the labor market and inflation.”
Absent from their policy statement this time around, however, was an assertion that they were confident that inflation would rise over the medium term, based on the strength of the labor market. To us, this says they’re not so sure that inflation will rise as much as previously expected, thanks to financial market turmoil and sharply lower oil prices.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.
Director—Global Economic Research
Joseph G. Carson joined the firm in 2001. He oversees the Economic Analysis team for AllianceBernstein Fixed Income and has primary responsibility for the economic and interest-rate analysis of the US. Previously, Carson was chief economist of the Americas for UBS Warburg, where he was primarily responsible for forecasting the US economy and interest rates. From 1996 to 1999, he was chief US economist at Deutsche Bank. While there, Carson was named to the Institutional Investor All-Star Team for Fixed Income. He began his professional career in 1977 as a staff economist for the chief economist’s office in the US Department of Commerce, where he was designated the department’s representative at the Council on Wage and Price Stability during President Carter’s voluntary wage and price guidelines program. In 1979, Carson joined General Motors as an analyst. He held a variety of roles at GM, including chief forecaster for North America and chief analyst in charge of production recommendations for the Truck Group. From 1981 to 1986, Carson served as vice president and senior economist for the Capital Markets Economics Group at Merrill Lynch. In 1986, he joined Chemical Bank; he later became its chief economist. From 1992 to 1996, Carson served as chief economist at Dean Witter, where he sat on the investment-policy and stock-selection committees. He received his BA and MA from Youngstown State University and did his PhD coursework at George Washington University. Location: New York
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