Fed Thoughts: Zombie Apocalypse

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Fed Thoughts April 2018

Vincent Reinhart

Vincent Reinhart - Chief Economist & Macro Strategist

Hunkered in the basement, doors and windows boarded, the sound of their shuffling feet scrapes the floorboards above. Soulless, mindless, rigid in their movements, and relentless in their drive, they move forward, creating an enveloping sense of existential dread for all of us hidden below. In the dark, we are riven by the question: What primeval power pushes them forward?

There is a simple answer. The calendar of the Federal Open Market Committee (FOMC) indicates that there is a meeting in Washington, DC, on May 1 and 2. Governors of the Federal Reserve Board and presidents of the Reserve Banks will show up, even if there is no apparent purpose. As shown in the chart below by the light blue line, inferences from futures prices reveal that the probability of action at this meeting is very low. Indeed, there has been no apparent pulse for a May hike in a very long time. Indeed, some readings from futures markets are below the share of affirmative survey responses on whether there will be a zombie apocalypse in our lifetime.

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