Fed Raises Rates: Powell, “Fuck it, we’re going to 13.5”

September 26, 2018

Jackson Hole, Wy

Jerome Powell, Chairman of the Federal Reserve Board announced today that, “Fuck it, we’re going to 13.5% with the Federal Funds Rate.” In a move that zero people on Wall Street saw coming, the Fed also noted that, “We’re tired of this ticky-tack quarter point here, quarter point there bullshit. We decided to put up a number that would make people give us the respect we deserve.”

The announcement came as the Fed wrapped up it’s quarterly two-day meeting in Jackson Hole, Wyoming. Neel Kashkari, head of the Minneapolis branch of the Fed said he was, “A little surprised,” by Powell’s announcement, “…but not totally.”

Kashkari and Esther George, Kansas City Fed President, gave an impromptu interview after Powell’s announcement ended the two-day meeting. This reporter joined them over a late breakfast. George was sipping a mimosa and Kashkari a bloody mary. Both wore sunglasses and hats while they waited for their food to arrive.

Kashkari continued, “Wow. Things got a bit nutty last night after the full day of meetings.” Kashkari was reportedly referring to an informal gathering of the Regional Fed Chairs that started around the fire pit of The Statesman Lodge where the meetings were being held. Kashkari explained, “I think it was around midnight when shit got heated. We’d just cracked our third bottle of Pappy and Kaplan (Dallas Fed President Robert Kaplan) was going off about ‘They ain’t treatin’ us right. Ever since aught nine…no respect. Last time anybody took us seriously was the bailout.’”

George recalled, “I think it was around 1 am when Bostic and Bullard went to their rooms to crash. Then Johnny C went off.” She was referring to John C. Williams of the San Francisco Fed. “Any of you bitches remember twenty percent?!?”

Kashkari confirmed, “Yes! He was the first to bring up the whole twenty percent thing.” He was referring to the astoundingly high Fed funds rate in 1980. In an attempt to reverse the inflation of the 1970’s, the Fed, under Chairman Paul Volcker, set the rate to twenty percent. Kashkari continued, “Kaplan was going on and on about Volcker, ‘He was the fucking man! Twenty fucking percent…what a fucking boss. Nobody fucked with Volcker.’ I think he has a man crush on him.”

“At that point, Jerome was just kind of taking it all in, I don’t remember him getting riled up until later,” George said. When asked how the voting went for the rate hike, George replied, “Umm, I’m not one hundred percent clear on that.” Turning to Kashkari for help she asked, “How did we end up in Charlie’s (Chicago Fed President Charles Evans) room?”

Kashkari filled in, “He somehow had a suite, so we all went up there when they kicked us out of the fire pit. He had a case of Stella and I think Johnny C brought the weed.” George nodded, “Oh right, right. At some point after that, Jerome went on his tirade, ‘…and fucking Chump. The S&P drops a point and a half and Pumpkinhead starts mumbling that we’re being too hawkish. The fuck does he know? He can’t tell the difference between an inverted yield curve and fucking yield sign. He thinks he’s responsible for this economy…wait until he hear’s what I have to say tomorrow.”

Kashkari, “Yes! I remember that! Then he called for a new vote, I seconded the motion….”

George added, “And we called Bostic and Bullard and woke them up.”

Kashkari finished, “Right, right. I honestly didn’t remember what number we agreed on until Jerome announced it today.”

George added, “I’m so glad you said that, because I didn’t either. I’m still a little foggy on some details, but overall it was a lot of fun. And I think Jerome’s speech today nailed it.”

After announcing the rate hike, an increase of 1,125 basis points over the current level, Powell capped off his speech with a short and somewhat cryptic pronouncement, “Anybody got anything to say about it? I didn’t think so. Think about this the next time you ignore the Fed for nine years.” At which point he pulled the microphone from it’s stand, dropped it on the floor and walked out of the meeting.

Thomas Kurdner, lead market analyst at JP Morgan Chase, said he was confused, “He acted like we don’t pay them any attention. Seriously? ‘Will the Fed raise rates a quarter point or won’t they?’ It’s all anyone on the street has been talking about for the past two weeks.”