Fed Powell – Chairman of the Federal Reserve – answers reporters’ questions on the central banks policy and outlook following the decision to keep rates unchanged at 4.25% – 4.50%. The decision was largely expected.There were two dissents which is the first time two Fed officials dissented since 1993.
A recap of the statement said:
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No rate change as expected; Waller and Bowman dissented, voting for a 25 bps cut.
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Kugler did not vote at this meeting. That was preannounced.
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The Fed said the economic outlook remains elevated, but dropped the June phrase that it “has diminished.”
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Growth was described as moderating in H1, softening from the prior “solid pace” language.
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Unemployment remains low, labor markets solid, and inflation somewhat elevated.
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No hints at future cuts; the Fed remains in a data-dependent, wait-and-see mode.
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The Fed repeated it will “carefully assess incoming data, the evolving outlook, and the balance of risks.”
The USD retraced a little bit the gains seen earlier today, but the dollar remains nearer the high. The US stocks remain higher with the S&P up 0.26% and the NASDAQ index up 0.50% going into the press conference. Remember, Microsoft and Meta will report their earnings after the close. Shares of Meta are currently down -0.02%. Shares of Microsoft are up 0.03%.
The US 2-year yield is at 3.879% up 0.4 basis points. The 10-year yield is 1.8 basis points at 4.346%.
Gold is lower by $29 or -0.87% at $3298 ahead of the press conference. Bitcoin is down $170 at $117,710
To watch the press conference LIVE, click below:
Highlights from the Fed Chair Press conference will be added below:
- Economy is in a solid position
- inflation somewhat above target.
- Believe current stance of policy leaves us well-positioned to respond in a timely way
- Moderation in growth reflects slowdown in consumer spending.
- Activity and housing sector remains week.
- Unemployment is low and has remained in narrow range.
- Wide set of indicators suggest jobs market is near its maximum at the moment.
- Expects PCE up 2.5% and core up 2.7% in 12 months through June.
- Most measures of long-run inflation expectations are consistent with that goal.
- Tariffs have exerted pressure on some goods but wider impact unertain.
- A reasonable base case is that inflation risks are a one-time increase in price level, but that is uncertain.
- Sees current stance as appropriate to guard against inflation risks.
- On track to wrap up policy review by late summer.
Q&A begins:
- We are modestly restrictive.
- Inflation is running a bit above 2% even excluded the impact of tariffs.
- Economy is not behaving as if rates are holding back economy inappropriately
- Expects to have more information in the coming months.
- We have made no decision about September.
- We will get two rounds of employment inflation data before the September meeting.
- We will be taking that information into consideration when we make that decision at that time.
- Statement about uncertainty reflects changes since last meeting. It had not this minister further percent June meeting.
- Still a ways away from seeing where things settle.
- It has been a very dynamic time for the trade negotiations.
- Many uncertainties left to resolve: feels like there’s much more to come.
- GDP and PDFP numbers came in right about where we expected them.
- Very similar to where they were a year ago job, job creation has slow but still has supply for workers
- Demand and supply for workers are coming down at about the same rate
- We do see downside risk in the labor market.
- Main number you have to look at now is the unemployment rate.
- Breakeven number for job creation has come down.
- On dissents, what you want is a clear explanation and we had that today.
- People thought carefully about this and put their positions out there.
- Inflation is modestly above target. Unemployment is at the target.
- My own estimate is that policy is modestly restrictive.
- We know the neutral rate by its works. Will be making that judgment as we go.
A snapshot of the markets:
- Dow industrial average -20 points or -0.04%
- S&P index +11.4 points or 0.18%
- NASDAQ index up 94.94 points or 0.45%
- 10 year yield 4.364%, +3.6 basis points. Two year yield 4.907%, +3.3 basis points.
Continuing:
- tariffs are starting to show up in some consumer prices
- We think we have a long way to go nowhere will be on in the impacts of the tariffs.
- We will make sure this does not turn into serious inflation.
- Trying to accomplish our goal in an efficient manner.
- There may be some stimulative effect from tax bill, but not major one.
This article was written by Greg Michalowski at investinglive.com.
