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Jonathan Levin

Data-Dependent Fed Runs Out of Data to Change Its Mind

The economic calendar is light until the FOMC meets July 26-27 to vote on monetary policy. The latest reports probably seal the decision for a 75-basis-point increase.

Staying the course.

Staying the course.

Photographer: Eric Lee/Bloomberg 

Federal Reserve policy makers like to claim they are “data dependent” when it comes to monetary policy decisions, but this month they have run out of consequential economic releases on the calendar to change their minds. That should more or less seal the fate of interest rates for the rest of the summer, with less than two weeks to spare before the Federal Open Market Committee meets again to discuss the federal funds rate.

When they convene on July 26-27, FOMC voters are now likely to raise interest rates by 75 basis points to a range of 2.25%  to 2.5%, matching last month’s jumbo-sized hike, the largest in nearly three decades. That will be remembered as a historically massive and appropriate step toward curbing the worst inflation in four decades, but consumer prices are increasing so fast in the US that Wall Street had started to wonder if even that was enough. Mercifully, it now looks as if the Fed will stick with the original plan, and that’s a good thing. Too much improvising is only going to leave households and investors with the impression that the central bank is becoming desperate.