This has been a confusing and somewhat puzzling year. After so much negativity and caution heading into the start of the year, the economy managed to eke out a gain of 3.2% gross domestic product in the first quarter, and the S&P 500 and Nasdaq indexes have hit new all-time highs with strong double-digit gains. It’s almost as if the weakness at the end of 2018 was somehow faked.

Federal Reserve Chairman Jerome Powell and the Fed’s Federal Open Market Committee (FOMC) members must have had some serious discussions ahead of their formal decision on interest rates. While no rate change expectations were expected, there has been debate over how Powell and those Fed members were going to look out at the economy now that growth has been stronger than expected with tame inflation.

With the backdrop of global growth continuing to disappoint, China is in the midst of stimulating its economy and Europe is tilting even closer to recession levels. Europe even recently climbed back above the $10 trillion mark for its negative interest rate bond yields.

The April 30 to May 1 FOMC decision on interest rates was a unanimous decision to keep federal funds rate flat in a 2.25% to 2.50% range. Wednesday’s vote was unanimous at 10-0. Also kept flat was the discount rate at 3.00%, and the Fed even notched its IOER to 2.35% from 2.40% to stop an upward drift of the fed funds rate.

Most important in the message is that the Fed is keeping its “patient” stance when it comes to future decisions on interest rates. Strong and solid jobs gains have been noted along with the May 1 decision along with the note that headline and core inflation have declined and are running under the 2.0% level.  Growth of household spending and business investment were shown to have been slower in the first quarter.

The most important parts of the FOMC’s official statement said:

The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes… The Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Stocks had sold off from the opening bell’s strong gains throughout the day, but the “patient” stance has brought buyers back in as they have little new fears that Jerome Powell and his team are leaning back toward a tightening bias again. This is a day that the S&P 500 hit a new all-time high, like all that caution 120 days ago was not even real.

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