Steady Expansion, Not Overheating: Why the Fed Is Holding Pat
The July macro data confirms what the Federal Reserve already suspected. The U.S. economy continues expanding without overheating, leaving policymakers with little reason to adjust course before year-end. M2 money supply grew 0.45% in July, while core CPI rose just 0.22% month-over-month. Unemployment holds at 4.1%, and the 10-year Treasury yield sits at 4.8%. The Phillips-curve trade-off remains benign, giving the Fed room to maintain its pause at 3.63%.
Key Takeaways M2 expanded 0.45% in July, signaling continued liquidity support. Core CPI at 0.22% month-over-month remains below levels that would compel tightening. The 2-10 year spread at 41 basis points reduces near-term recession fears.…
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