Live updates on the May Fed rate decision | Wilnesh News

Federal Reserve Chairman Powell said that regardless of what happens in the U.S. presidential election this year, the Federal Reserve will continue to make interest rate decisions independently, otherwise any approach may lead to negative consequences.

“It’s hard enough to figure out what’s going on with the economy here,” Powell said. “These are difficult things, and if we consider a whole set of other factors and use them as a new filter, it reduces the likelihood that we’re really going to get it right. Economic Possibilities.”

Powell added that the upcoming election “is not part of our thinking.” “This is not what we were hired to do.”

— Kim Ha Kyung

Federal Reserve Chairman Jerome Powell stressed that the slowdown in reducing the balance sheet was not intended to provide easing policy or reduce restrictions on the economy.

“It’s really about making sure that the process of reducing the balance sheet to where we want it to be is a smooth process and doesn’t cause financial market turmoil like the last time we did it, and the only other time we did it. It’s been done before,” he said.

— Michelle Fox

Last week’s GDP report showed overall growth slowing but prices rising steadily, raising some concerns that the United States has entered a period of “stagflation,” although Federal Reserve Chairman Jerome Powell played down the idea on Wednesday.

“I really don’t understand where this comes from,” Powell said.

The central bank president pointed out that by some indicators, the economy is growing at 3% and the inflation rate is below 3%.

“I don’t see a ‘buck’ or an ‘inflation,'” Powell added.

— Jesse Pond

Major stock indexes rose sharply on Wednesday afternoon after Federal Reserve Chairman Jerome Powell said the next change in policy rates was unlikely to be a rate hike.

The S&P 500 rose 0.8% and the Nasdaq gained 1%. The Dow rose more than 450 points, or 1.2%.

— Dara Mercado

Federal Chairman Jerome Powell ruled out raising interest rates as the next policy move at the June meeting.

“I think the next change in policy rates is unlikely to be a rate hike. I would say it’s unlikely,” Powell said.

Asked what would be needed to raise interest rates, Powell said, “I think we need to see convincing evidence that our policy stance is not restrictive enough to sustainably lower inflation over time.” to 2%.

— Yun Li

Recent statements from the Federal Reserve indicate that central bankers want to have “greater confidence” that inflation will fall to 2%. Fed Chairman Jerome Powell said it’s unclear what exactly that means, but the Fed hasn’t done that yet.

“So far this year, the data does not give us greater confidence,” Powell said.

The Fed chairman later said the central bank was willing to stay on hold until inflation conditions changed.

“It may take longer than previously expected to gain such confidence,” Powell said. “We are prepared to maintain the current federal funds target rate for an appropriate period of time.”

— Jesse Pond

Federal Reserve Chairman Jerome Powell said on Wednesday that the central bank is paying close attention to the job market, which has so far shown resilience amid tightening monetary policy.

“We are also prepared for unexpected weakness in the labor market,” Powell said, noting the central bank “Dual Mission” These include stable prices and maximum employment.

— Alex Harling

David Kelly, chief global strategist at J.P. Morgan Asset Management, said the Fed’s decision to cut the amount of Treasury debt on its balance sheet from $60 billion to $25 billion sent a slightly dovish message.

He said on CNBC’s “Power Lunch” program that the number could reach $30 billion.

“The fact that they’re putting in an extra $5 billion may not sound like a lot, but it does suggest that they’re trying to send a message here that they’re not going to be too tough,” he said. “It gives some people more confidence that they There won’t be another rate hike, but they will eventually cut rates this year.”

— Michelle Fox

Scott Helfstein, senior vice president and head of investment strategy at Global

“The Fed is more concerned about inflation failing to fall as the economy accelerates, which should reassure investors,” Helfstein said. “When interest rates are stable, companies are better able to plan, invest and innovate. .”Markets love predictability and consistency.”

Hefstein said central bankers may expect an acceleration in the economic cycle rather than a contraction, given rising commodity prices and better-than-expected earnings from industrial and technology sectors. “Business investment and consumer spending are likely to drive the next phase of economic expansion, rather than lower interest rates,” he said.

— Pia Singh

Greg McBride, chief financial analyst at Bankrate, said the Fed’s early statement on the lack of continued progress in curbing inflation should tell traders not to hold their breath on a rate cut.

In the first paragraph of its statement, the central bank said annual inflation had made little progress towards 2%, its preferred level. For McBride to point this out at launch is telling.

“To point that out in the first paragraph is to say there won’t be a rate cut anytime soon,” he said.

— Alex Harling

Federal Reserve Chairman Powell warned of sticky price pressures at a post-meeting press conference.

“Inflation remains too high. Further progress in reducing inflation is uncertain and the path forward is uncertain,” he said.

— Yun Li

The Federal Reserve said on Wednesday it would slow down the pace of allowing maturing bond proceeds to roll off balance sheets and not be reinvested.

The program, nicknamed “quantitative tightening,” began in June 2022 and has reduced the balance sheet to $7.4 trillion, down $1.5 trillion from its peak in mid-2022.

Starting in June, the Federal Reserve will lower the monthly national debt ceiling from $60 billion to $25 billion. As a result, annual holdings will fall by $300 billion, compared with $720 billion at the start of the program.

—Michelle Fox, Jeff Cox

Jim Caron, chief investment officer of Morgan Stanley Investment Management’s portfolio solutions department, said the market expects the Fed’s first rate cut to take place in December, but many forecasters are thinking of July.

For Cullen, the answer will depend on changes in the labor market.

“The fly in the ointment is the labor report,” Cuarón said on CNBC’s “Power Lunch.” “If the labor market starts to weaken, I think the Fed will start cutting interest rates earlier.” The labor market remains strong, and I think they will It may last until December.

— Michelle Fox

The Federal Reserve issued its latest statement Wednesday afternoon. Notably, the central bank cited a lack of progress in getting inflation back to its 2% target.

Click here to see what has changed since the last meeting in March.

— Alex Harling

Central bank policymakers left interest rates unchanged at the end of the meeting, a move that was in line with market expectations.

The federal funds target rate remains in the range of 5.25% to 5.5%.

The Fed said there was “lack of further progress” on its goal of lowering inflation to 2%.

Read more on the Fed’s latest decision as CNBC’s Jeff Cox reports.

— Dara Mercado

The S&P 500 and Nasdaq both fell about 0.2% as the Federal Reserve prepared for its interest rate decision. The Dow Jones Industrial Average rose about 130 points, or 0.3%.

The 2-year Treasury yield fell about 3 basis points to 5.012%, while the 10-year Treasury yield edged down nearly 4 basis points to 4.647%.

— Dara Mercado

BeiChen Lin, investment strategist at Russell Investments, said Federal Reserve Chairman Jerome Powell may not provide too many details on the timing of the first rate cut.

“I think Chairman Powell is likely to abide by the ‘silence is golden’ motto at this week’s post-May Fed meeting press conference,” he said in a written statement. “He is likely to reveal as little as possible about what he expects. cut interest rates for the first time to preserve selectivity.”

The strategist noted that while market participants have been concerned about sticky inflation, he noted that wage pressures “may continue to ease into 2024” as the labor market further normalizes.

“Since wages are a key input cost for many service industries, slower wage growth will also help reduce overall price pressures,” said Lin, who believes the likelihood that the Fed will have to raise interest rates is “very, very low.”

“Even if inflation unexpectedly rises in the first quarter, we still think the Fed will be able to cut interest rates this year, most likely in September and December,” the strategist said.

— Dara Mercado

Vanguard Group economists Joe Davis and Josh Hirt said the recent burst of hot inflation data is reducing the likelihood of a hoped-for “soft landing.”

Most recently, the employment cost index, which tracks wages and benefits, grew more than expected in the first quarter. The data came after the core personal consumption expenditures price index rose above economists’ expectations for March.

“Inflation data over the past quarter have remained surprisingly hot, and it is becoming increasingly difficult to argue that these surprises are all due to individual components as a ‘one-off,'” Davis and Hurt said in a written statement. Maintain. They pointed out that although the Fed’s policy is restrictive, it is not restrictive enough.

“Time will tell, but the data suggests that what we call a ‘delayed landing’ is more likely than the long-awaited ‘soft landing,'” they added. “As supply tailwinds recede, we forecast core inflationary pressures will remain high, which we expect will keep the Fed cautious about cutting rates this year.”

— Dara Mercado

Central bank policymakers are expected to keep interest rates unchanged at a target range of 5.25% to 5.5%. In fact, federal funds futures trades indicate a 99% chance that interest rates will remain stable. CME Group Fed Watch Tool.

However, the main events will be the statement from the policy-setting Federal Open Market Committee at the end of this meeting, and Fed Chairman Powell’s press conference at 2:30 pm ET. Traders will interpret Powell’s comments to understand where policymakers stand on the path to interest rates in 2024.

The Fed is also likely to share details of its balance sheet, which has been reducing its holdings of maturing Treasuries and mortgage-backed securities.

Read more from CNBC’s Jeff Cox on the future of the Fed.

— Dara Mercado