If you didn't know there was a Fed meeting today, you didn't miss anything: it made no changes at all to monetary policy.

The only changes to the Fed's statement were an acknowledgement of some economic improvement since the last meeting in early June and an added sentence that the Fed thinks the "path of the economy will depend significantly on the course of the virus." 

Fed Chairman Jerome Powell added some color in the press conference by noting that the pace of the recovery has slowed recently – although he didn't seem concerned about a double-dip recession – that the Fed has no plans to curtail its accommodative stance in any way, and that the Fed views the economic shock as "disinflationary."

Add it all up and it looks like we are eventually headed toward higher inflation.  Broader measures of the money supply, have perked up much more noticeably than after the Subprime Panic in 2008-09.  Meanwhile, we think the Fed would like to see a period of inflation above its target of 2.0% to offset the amount of time inflation has spent below 2.0%.  Expect the Fed to be very slow to raise interest rates relative to economic fundamentals for the next several years.       

Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist

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