Two critical points from the Fed's November meeting

Understanding the state of play & the Fed’s thinking

Before delving into the two key points from the Fed’s November meeting, it is important that you have a strong understanding of the state of play that led to the Fed’s November announcements, as this will help you to understand why they were made, and also better understand where monetary policy will head into the future.

The first thing that needed be ascertained, was whether anything had materially changed since the Fed’s September meeting. In order to have determined that, one needed to look at the movement in key data points.

The movement in key statistics from the Fed’s September announcement to now, are as follows:

CPI: 8.3% vs 8.2% now
Core CPI: 6.3% vs 6.6% now
Unemployment rate 3.7% vs 3.5% now
Average hourly earnings: 5.2% vs 5.0% now
Job openings: 11.2m vs 10.7m now
Ratio of job openings to unemployed: 1.97 vs 1.86 now

From this we could ascertain that inflation was basically unchanged, whilst core CPI moved HIGHER and the unem…