⚠️Minutes of yesterday's FOMC meeting: Fed still buys time!

🔥There are 2 points to note:
1. Powell signaled that the Fed is in no hurry to cut rates because of the risks that an early reduction in ls poses.
2. The Fed Chair went on to reiterate that they do not think it would be appropriate to reduce interest rates when there are grounds to assume that inflation will return to 2%.
🔥Same as the last 3 meetings: The Fed is maintaining its view that it is "probably" going to lower rates in 2024 but not yet. Especially when growth is slowing and prices are trending up.
🔥Another issue that is discussed very closely is that the Fed will change capital adequacy rules at many banks (to 19%). Note that the number of banks in the US is somewhere over 4000, not counting small banks. For developing countries like Vietnam, only the big4 controls more than 50% of credit and has the involvement of the state, but with development, the capital market is mainly corporate bonds and stocks (banks account for a small proportion).
🔥Since the 2008 crisis, the Fed as well as the Senate Banking Committee have tightened regulations on banks' ownership and capital adequacy ratios. And the Fed is looking to tighten those regulations further, there are 2 reasons:
- Take weak banks out of the system
- Tighten lending conditions to help asset classes not heat up as currently (US stocks break the peak continuously)
- Help the Fed better manage the repo process
- After the bank run of 2 big banks and many businesses 1 year ago, the Fed does not want to keep bailing out banks forever. And the loan package to support liquidity for banks is also about to expire.
🔥As for whether the US may be at risk of recession or not, mn wait for the next post.