The Fed’s Mounting Microaggressions

The Fed’s Mounting Microaggressions

Given that millennials have entered Wall Street, perhaps it’s no surprise that any mention of rising interest rates is considered a “microaggression” that is likely to “trigger” a market funk that will require many sessions of counseling to overcome.

Fortunately, Fed Chair Jerome Powell may be better prepared for the task than the typical college president.

Last week, as we’ve noted, he announced a 0.25% increase in interest rates. That surprised no one. What did surprise some was his announcement that we can expect not one, but two more rate hikes by the end of the year. Heart be still!

Note to overly sensitive millennials: That likely amounts to a total rate hike of 0.5%. We think borrowers and the economy as a whole can withstand that step toward normalization, especially in light of today’s lower taxes and deregulation.

A further trigger was pulled when Power shortened the by-now-standard Fed policy statement text by about 80 words, removing language noting that interest rates were “likely to remain, for some time, below levels that are expected to prevail in the longer run.”

For those who supported the Bernanke/Yellen Fed and oppose the Powell Fed, that can only mean that the Fed has an evil plan to ruin the economy by boosting interest rates big time.

The last time we checked, opponents of lower taxes and deregulation (i.e., Democrats speaking publicly) were concerned about an overheated economy. So now the Fed has taken steps to prevent overheating and provided an option to raise rates more rapidly if necessary. And yet … politicians are worried that the economy will be too strong!

As if that’s not bad enough, Powell microaggressed further by announcing that, beginning next year, the Fed will schedule a news conference after each of its policy meetings. Currently, it holds a news conference after every other meeting.

So twice as many press conferences should make reporters happy and provide more information to the public, rather than reiterating a practically identical policy statement each time it meets, right? If you think that’s the case, you likely need some sensitivity training.

According to The Wall Street Journal, some are interpreting that added press conferences as doubling the opportunity for the Fed to raise interest rates.

We have not detected any gender bias or racism in the latest Fed decisions, so maybe these triggers and microaggressions aren’t as horrifying as they seem. And, by the way, the 6.8% unemployment rate for black workers recently reported by the Bureau of Labor Statistics was the lowest in the 45 years during which the data has been tracked. And the rate for Hispanics/Latinos is an even lower 4.9%, down from double figures as recently as October 2012.

“Any idiot could have figured out quantitative easing,” Bloomberg’s Richard Breslow recently wrote. “History will show that the real heroes are the ones who can get us out of this mindless mess.”

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