What I learned watching the bankers party

Today we’ll wrap up our talk on the Fed, interest rates, and the future…

When we left off yesterday, I mentioned that something telling happened right in my back yard. Michelle Bowman spoke at the 133rd Annual Convention of the Kentucky Bankers Association last week. 

Bowman is one of the 12 voting members of the Fed. She occupies a seat representing America’s community banks. That’s why she was invited to speak at the Kentucky Bankers’ event.

The convention took place at the historic Homestead Resort up here in Hot Springs, VA. As fate would have it, my in-laws came to visit us the same weekend… and we put them up in a room at the Homestead. We were there on Sunday as the conference attendees were getting settled in.

I met a few Kentucky bankers at the pool that afternoon. And we could see their opening reception from the balcony of my in-law’s room. It took place out on the lawn. 

Here’s a picture I took as they were setting up:

Here we can see the grounds crew setting up tables and chairs for the event. This entire lawn was packed with bankers enjoying food, beverages, and live music a few hours later. 

I’m not sure if Michelle Bowman participated in the festivities, but her talk on Tuesday was memorable.

Bowman told attendees that she voted for a 25-point rate cut, and that she disagreed with the Fed’s decision to cut 50 basis points. For a few reasons…

Bowman said she was afraid the 50-point cut would send a message that the Fed sees “fragility” in the economy. She also fears that the market will come to expect large rate cuts in the months to come, but those large cuts “might not happen”.

So both Powell and Bowman implied that they don’t expect interest rates to move dramatically lower in the months to come. 

While rates may come down a little bit, “normalization” is still Powell’s chosen course. We’ll talk about that more next week.

-Joe Withrow

P.S. We’re in the early stages of planning out an investment webinar for later this month. It’s still preliminary, but I think we’re going to call it “The 4.5 Things You Need for Financial Freedom”.

I don’t have any details to share with you today… just putting the idea on your radar for now. More to come on this in a week or two. 

Have a great weekend!