The Fed’s lessons learned from its COVID response

”Life is a succession of lessons which must be lived to be understood. All is a riddle, and the key to a riddle is another riddle.” – Ralph Waldo Emerson

At its latest meeting, the US Federal Reserve (Fed) board of governors projected 4.7% nominal US growth (2.1% real GDP growth + 2.6% personal consumption expenditures inflation) and an unemployment rate of 4.0% for the balance of 2024. Despite those robust figures, the Fed still expected to lower the policy rate by 75 basis points (bps) this year. While this will likely change given the recent high inflation prints, a divergence remains, with the central bank looking to cut rates and many market commentators wondering what the Fed’s hurry is.

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