There was no change by the Fed in either current monetary policy or guidence for future rate actions from last week’s FOMC meeting. The Fed did give a better signal as to the timing of their effort to shrink the size of their balance sheet. It now appears they will announce the beginning of the process at the September meeting and begin in October. They did not change their guidence of one more rate increase this year. We expect it at the December meeting. They also did not change their economic and inflation outlook. They continue to refer to the last five years of slow economic growth and low inflation as transitory and are forecasting faster growth and higher inflation pressures in the second half of this year.

The Advance report for Real GDP growth came in above consensus forecasts at 2.6%, just below our forecast of 2.7%. The Advance report is subject to large revisions and the bias over the last three years has been upward. We believe we will end up at 3% when all of the data is compiled. The annual benchmark revisions did not change the trend of economic growth in the past three years…

ProBank Austin Advisor – July 31, 2017