Last April, the California regulatory agency that oversees air quality announced its plan to encourage the sale of electric and zero-emission vehicles while phasing out the sale of gasoline-powered vehicles by 2035. If approved by the California Air Resources Board, 35% of new passenger vehicles would be required to be powered by electricity or hydrogen by no later than 2026, with 100% compliance to follow 10 years later.
You think that because you understand “one” that you must therefore understand “two” because one and one make two. But you forget that you must also understand “and.”
— Donella Meadows, Thinking in Systems, 1990
On May 4, the Federal Open Market Committee is expected to announce a 50-basis-point (bp; 100 bps equal 1.00%)—0.50%—increase in its target for the federal funds rate. It’s also likely to announce it will start shrinking its balance sheet. What will the balance-sheet reduction look like, and what might it mean?
The Federal Reserve (Fed) and the money markets seem to agree that it’s time for the Fed to shore up its inflation-fighting credentials. As economic data continued to come in hot over the past few months — showing a tight labor market and inflation not seen for generations — the prospect of accommodation removal in its various forms moved from a distant event to one likely to begin soon. The Fed has signaled it will raise rates at its March meeting; the main question over the past month or so has been whether the first increase would be 25 basis points (bps; 100 bps equal 1.00%) or 50 bps.
A little background
Russia launched military attacks against Ukraine. That was after Russian President Putin recognized two regions of Ukraine as separate and sovereign territories. Putin’s actions were almost universally condemned as an unprovoked act of war and a violation of international law. The U.S., the U.K., and the European Union were quick to impose sanctions against individuals connected to Putin and Russian banks.