If Fed Funds Rate ‘Fails’ to Fall

Today's Outside the Box is by my good friend and PIMCO's Managing Director, Paul McCulley. In his article "If Fed Funds Rate 'Fails' to Fall," Paul discusses the mindset behind the decision making of central banks and how they determine policy. From there he goes on to explain that the markets have "priced-in" expectations of the Fed easing rates sometime later this year. But what if the Fed doesn't decide to make a rate cut? Paul takes a quick look at both scenarios.

Paul writes a monthly commentary, the Global Central Bank Focus that, because of its well-researched and unique perspective, is always at the top of my reading list. As a Managing Director at PIMCO, he is an intelligent economist and forward thinker who always provides a valuable perspective.

I trust that you will find this piece interesting and an "Outside the Box" take on the Fed's policy over the coming months.

John Mauldin, Editor
Outside the Box

subscribers@mauldineconomics.com

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If Fed Funds Rate 'Fails' to Fall

By Paul McCulley

As a single parent of a seventeen year old son, my night job has come to resemble my day job as a central bank watcher: listening to the words of my protagonist in the context of deeds, forming expectations of future words and deeds, adjusting my risk positions accordingly. Neither is easy though increasingly, I believe it is easier to anticipate a seventeen year…