Key takeaways from the last FED meeting
Today was no exception. Jerome Powell entered the press conference with widespread market expectations that he would show his inner hawkishness and show some caution about stubborn inflation without upsetting Wall Street too much. is. In fact, there was even talk that he might be suggesting he was open to further tightening. But the Feds provided warm blankets instead of whips.
"The market reaction was pretty reasonable given what he said," said Bill Dudley, a Bloomberg Opinion columnist and former New York Fed president . "He basically said, 'We did it.' There's a feeling in the stock market that the Fed won't destroy the party. Chairman Powell said a rate hike is unlikely. Policy remains restrictive and rising interest rates continue to impact the economy through long and variable lags. This still looks like the Fed is ready to cut rates as soon as the data holds. (The Fed is also slowing the pace of balance sheet unwinding.) ``Let's just say that going into this meeting there was a lot of pessimism and fear that he would become more aggressive,'' said Jeff Rosenberg of BlackRock. I think it was a great relief that he stuck to what we saw from this chairman.
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He was very one-sided and saw the glass half-full." Stocks soared during Mr. Powell's press conference, but only sold off after Mr. Powell's speech. It's understandable why stock traders prefer his approach. At worst, it's not a policy change; at best, it's a Fed "put," or a diminished sense that the Fed will raise rates quickly in the face of a significant economic slowdown. It's less clear how good this is for bonds, but the rally in U.S. Treasury following Powell's remarks was more sustained. Revenues were consistently low. Longer term, markets still face the question of whether inflation expectations are likely to rise given the Fed's current stance.
Rosenberg said Powell's policy is "a more accommodative stance given some challenging economic indicators." Bank of America's Michael Geipen took a situational view of the Fed's stance. Banks did what they wanted today. “There will be restrictions in May,” he said. "We'll see what happens to the hawks in June." How has inflation evolved? Here are the key paragraphs of the Fed's statement compared to the paragraphs from the previous meeting: Deleted parts are shown in red, new content is shown in bold and blue.
the Federal Reserve is keeping interest rates the same
The Federal Reserve on Wednesday stressed that inflation has remained stubbornly high in recent months and plans to cut interest rates until it has "greater confidence" that price growth is sustainably slowing to its 2% target. He said no. The Fed announced its decision in a statement after its last meeting, leaving its key interest rate unchanged at about 5.3%, the highest level in 20 years. Several unexpected reports on prices and economic growth have recently shaken the Fed's belief that inflation is steadily declining. The combination of high interest rates and persistent inflation has also emerged as a potential threat to President Joe Biden's re-election. "Recent months have shown that inflation is not making further progress toward our 2% goal," Chairman Jerome Powell said at a news conference. "It will likely take longer to gain further confidence than previously expected," he added.
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