Tuesday, July 16, 2024

Live updates: Fed May 2023 decision


7 minutes ago

Powell says it may be too early to cut rates

If the Fed members are right, Chairman Jerome Powell said, it may take a while for interest rate cuts to seem reasonable.

“We on the committee have the view that inflation is going to come down not so quickly,” he said. “It will take some time, and in this world, if these predictions are generally correct, it will not be appropriate to cut rates and we will not cut rates.”

He added that demand and labor market conditions will likely need to weaken some more to see progress in non-residential services and rate cuts deemed “appropriate”.

– Samantha Sobin

11 minutes ago

Powell says the cooling of the labor market suggests a recession can be avoided

Federal Reserve Chairman Jerome Powell said initial signs of weakness in the labor market suggest the path to a “soft landing” for the US economy is not far off the table.

“There are no promises in this,” Powell said, “but it seems to me possible that we can continue to feel calm in the labor market without the dramatic increases in unemployment that have coincided with many previous episodes.”

He added, “Wage increases are coming down, and that’s a good sign. Down to more sustainable levels… A case of avoiding a recession is, in my opinion, more likely than a case of recession.”

– Jesse Pound

18 minutes ago

Powell says more data is needed to see if the federal funds rate is constrained enough

Federal Reserve Chairman Jerome Powell believes more data is needed to decide whether the federal funds rate is sufficiently constrained.

“We’ll need data to compile on that, [that’s] It is not an assessment that we have made that means we have reached this point. I think it is not possible to say that with confidence now.

Powell said a summary of the economic outlook from the March FOMC meeting showed that decisions made up to that point had resulted in an appropriate level of interest rate increases. Powell says the committee will reassess the idea in June.

– Brian Evans

21 minutes ago

Powell calls JPMorgan’s acquisition of First Republic an ‘exception’

Federal Reserve Chairman Jerome Powell called JPMorgan’s acquisition of First Republic an “exception,” during a press conference on Wednesday.

“I think it’s probably a policy that we don’t want big banks to make big acquisitions,” he said. “That’s the policy, but this is an exception for a failed bank and I think it’s actually a good outcome for the banking system.”

He added that another regional bank buying First Republic would have been a good outcome.

Powell also said he has no “agenda” to continue consolidating banks, adding that he sees value in having banks of different sizes within the system achieve different goals.

– Samantha Sobin

26 minutes ago

Powell says the process of tackling inflation must go further

Federal Reserve Chairman Jerome Powell said Wednesday that while inflation has improved over the past year, the battle to tame price pressures is far from over.

“Inflation remains well above our long-term target of 2%,” Powell said. “Inflation has eased somewhat since the middle of last year, however, inflation pressures continue to rise, and there is still a long way to go in the process of bringing inflation back to 2%.”

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Powell added that the long-term inflation outlook remains “well anchored,” and that the central bank remains focused on promoting maximum employment and strengthening purchasing power.

– Brian Evans

33 minutes ago

Lazard Temple says pause necessary to see ‘full effects of tightening’

A halt to rate hikes may be necessary from here to see Fed tightening move through the system, according to Ronald Temple, chief market strategist at Lazard.

“The Federal Open Market Committee (FOMC) struck an appropriate balance between reining in inflation and avoiding exacerbating pressures in the banking system,” he said. “Assuming that banking problems subside, additional interest rate increases may be needed, but it is time to pause to allow the full effects of tightening to work its way through the economy.”

– Samantha Sobin

35 minutes ago

Powell says no decision has been made yet about a “pause” in raising interest rates

Chairman Jerome Powell said the Fed has not made a firm decision on whether to stop raising interest rates.

“No decision was taken to stop temporarily today,” the head of the Central Bank said during his press conference.

Markets were looking forward to the Fed signaling that the cycle of interest rate hikes is coming to an end after Wednesday’s quarter-point rate hike.

– Jeff Cox

37 minutes ago

Powell says further rate hikes are still possible

Jerome Powell said the Fed could continue to rally if economic data points the central bank in that direction.

“We are prepared to do more if further monetary policy adjustment is warranted,” Powell said.

He later added that “the decision to pause was not taken today” but said the change in the statement’s language about the policy’s consistency into the future was “meaningful”.

– Jesse Pound

39 minutes ago

Stocks briefly turned red as Powell said the Fed was “prepared to do more” if needed

The major averages temporarily turned negative as Federal Reserve Chairman Jerome Powell indicated that the central bank is “prepared to do more if greater monetary policy is warranted”.

Indicators recovered soon after. As of 2:41 p.m., the Nasdaq Composite was up 1%, the S&P 500 was up 0.6%, and the Dow Jones was up about 0.3%.

Darla Mercado

36 minutes ago

The chief economist at Realtor says the Fed’s rate hike is unnecessary and harmful

Lawrence Yoon, chief economist at the National Association of Realtors, said the Fed’s 25-point rate hike was “unnecessary and harmful” amid slowing inflation.

He said in a statement after the central bank’s decision that inflation will be lower with housing rents, a large component of the inflation reading, “will inevitably slow given 40 years of robust construction of empty new housing units.”

He added that the rapid increases had turned the balance sheets of many small regional banks upside down.

“They have become zombie-like banks, unable to lend even to good businesses because they are more interested in shuffling the balance sheet to survive,” Yoon said.

Halting the increases and even cutting interest rates later in the year, he said, would give those banks a better chance of survival.

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– Michelle Fox

42 minutes ago

The Fed will take a “data-driven” approach going forward

Federal Reserve Chairman Jerome Powell said the central bank will determine the pace of future monetary policy tightening after reviewing the data.

“Going forward, we will take a data-driven approach to determine the extent to which additional policy stabilization may be appropriate,” he said.

– Sarah Maine

48 minutes ago

Few surprises in the Fed’s latest statement, says Blaakley Financial Group

The Fed’s statement after the meeting on Wednesday hit many of the same points as it did during the March meeting, said Peter Boockvar, chief investment officer of Blakely Financial Group.

“They specifically reiterated that ‘the US banking system is healthy and resilient,'” Boockvar noted, adding that the central bank also reiterated that “tighter credit conditions for households and businesses are likely to affect economic activity, employment and inflation.”

“But, as expected and certainly by the Fed funds futures market, it is time to call a timeout, which means the game/anti-inflation is still on but at least they can sit back and determine ‘the extent to which additional policy fixation might be appropriate to re- Inflation to 2% over time.”

“I think if reporters get him out to openly admit that it’s time to take a break from raising interest rates, he’ll do everything he can to stress that rates aren’t going to get cut like they are in the fed funds futures market,” she continued.

– Hakyung Kim

one hour ago

The strategist says the Fed may be bringing rate hikes back into the toolkit

The Fed deleted a sentence in the earlier statement saying that “the Committee anticipates that some firm additional policy may be appropriate” for the Fed to achieve its 2% inflation target. Adam Crisavoli, founder of Vital Knowledge, believes this is a clear indication that the Federal Reserve could pause interest rate hikes.

“This is a strong signal from the Fed that the funds rate has hit the ceiling of the cycle – Powell won’t close the door on further hikes completely, but removing that line is the FOMC’s way of telling markets that they’re raising rates again in their toolkit,” he said. Chrisavoli on a note.

– Yun Lee

one hour ago

Traders focus on the key omitted statement from the Fed statement

Bond yields fell and stocks rose slightly as traders weighed in on the latest post-meeting statement from the Federal Reserve.

This time, the central bank appeared to soften its stance on future rate hikes, omitting a line about “further policy tightening” from its statement.

Darla Mercado

one hour ago

Fed statement changes line on ‘incremental policy steadiness’

One of the key changes in the Fed’s statement on Wednesday was the deletion of a key phrase that was seen at previous meetings as a signal that the central bank will continue to rally.

“The committee anticipates that it would be appropriate to install an additional policy,” the March statement read.

Instead, the new statement says the following:

“In determining the extent to which additional policy fixation to bring inflation back to 2 percent over time may be appropriate, the Committee will take into account the cumulative tightening of monetary policy, the delays with which monetary policy affects economic activity and inflation, and the delayed economic and financial developments.”

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– Jesse Pound

one hour ago

The Federal Reserve raises interest rates by a quarter point

The central bank raised interest rates by a quarter of a percentage point, a move widely expected by the market.

The increase takes the federal funds rate into the target range of 5% to 5.25%.

It was a unanimous decision by the Federal Open Market Committee.

Read more here.

Darla Mercado

one hour ago

Here’s what the market is doing ahead of the Fed’s decision

Stocks rose as the announcement of the Federal Reserve’s decision on the exchange rate looms at 2 pm.

As of 1:45 p.m., the S&P 500 was up 0.3%, and the Nasdaq Composite added 0.5%. The Dow Jones Industrial Average rose 0.1%.

Bond yields fell, as the 10-year Treasury rate fell nearly 6 basis points, to 3.37%. The interest rate on the two-year Treasury note was 3.92%, down 5 basis points.

Oil prices fell. West Texas Intermediate crude futures fell about 4%, and Brent crude futures fell 3.6%.

Darla Mercado

one hour ago

Stocks could see a sharp rally if this ends up being the last rally for the Fed

Investors are waiting for the central bank’s next steps, and they could be rewarded if this rate hike is the last step in the Fed’s tightening cycle.

An analysis by CNBC Pro found that the stock market gets a boost one to 12 months after the end of the Fed’s hiking cycle. The S&P 500 averaged an 8% gain and a 21% return in the three and 12 months after the series’ final rate hike.

Read more here.

Darla Mercado, Brian Evans

one hour ago

Investors are turning their focus to the Fed’s next steps

The market is certain that the Fed will push a 25 basis point rate hike this afternoon, bringing its benchmark interest rate of 5% to 5.25%.

The real question stumbling over investors now is whether the central bank will signal the end of its tightening or if it will leave the door open for more rate hikes to cool the economy.

There are many factors that will influence the Federal Open Market Committee’s next policy-making steps. Inflation has been on a subdued trend, with the CPI for March up 5% from a year ago – but it doesn’t seem to be slowing at a pace that will satisfy the Fed. Economic growth is also showing signs of slowing. Looming ahead is the April jobs report, due on Friday.

Recent problems in the regional banking space, including the failure of First Republic and the subsequent acquisition by JPMorgan, could influence the decision.

This means that what the Fed says in its statement regarding forward guidance – and what Chairman Jerome Powell details in his upcoming press book – is more important this time around.

Read more about what awaits the Fed here.

Darla Mercado, Jeff Cox

Rosario Tejeda
Rosario Tejeda
"Infuriatingly humble analyst. Bacon maven. Proud food specialist. Certified reader. Avid writer. Zombie advocate. Incurable problem solver."