Macro MATTers: Recent Fed communications and the coming end of QT

In this episode of Macro Matters, Matt Luzzetti, Chief U.S. Economist, and Matt Raskin, U.S. Head of Rates Research at Deutsche Bank, discuss recent Fed communications, focusing on Chair Powell's speech signaling a potential end to quantitative tightening (QT). They analyze the implications of a divided FOMC, recent economic data, and the potential impact of a loss of Fed independence. The conversation covers the Fed's reaction function, the possibility of rate cuts, and the nuances of policy implementation, including a potential shift in the Fed's policy rate target. They also explore the balance between controlling rates and the risk of being overly reactive, considering the lessons learned from the 2019 repo market pressures.