“Davidson” submits:
It seems that an undue amount of media speculation is allocated to whether or not the Federal Reserve will adjust Fed Fund rates.
The history of Fed Funds adjustments stems from 1953. Each Fed Chair had their own sense of how far above the market rate the Fed Funds seemed correct to them. The history shows markets setting rates with the Fed adjusting to keep Fed Funds premium in line. In other words, the market adjusts rates and the Fed follows with a delay of several weeks. Chair Powell, has used a premium of 0.20% pre-COVID and one can expect the same this cycle as rates adjust post-COVID. Today’s T-Bill rate is 0.12-0.13% up from 0.05% on Dec 30th. If T-Bill rates rise to 0.15%, we can expect the Fed to boost Fed Funds 0.25% from the current 0.1% to 0.35% level in a couple of weeks.
As an economic event, an adjustment in Fed Funds rates has little impact in my opinion. Markets establish rates based on investor perceptions of risk/reward. The Federal Reserve has established a long history of following market rates i.e., the T-Bill rate after a few weeks to keep Fed Funds rate at a premium. How it is believed that the Fed actually sets rates and carries an insight to markets and economics that no one else has acquired since 1953 is cognitive dissonance by my analysis.
As fast as T-Bill rates adjust, the Fed follows keeping a 0.2% premium.