Gary Cohn says Powell’s focus is on the job market
Fed Chairman Jerome Powell made it clear during his press conference that the data the Fed watches most closely than anything else is jobs data, said Gary Cohn, former chief operating officer of Goldman Sachs.
“He goes back and forth presenting you with both sides of the argument,” said Cohn, a former economic advisor in the Trump administration. “The only thing that keeps hanging its hat is the labor market. At this point it looks like we are just relying on labour.”
– Michelle Fox
Don’t expect a rate cut in 2023, Powell says
Jerome Powell said he doesn’t expect the Fed to cut interest rates this year, as some top strategists expect.
“Given our outlook, I don’t see us cutting interest rates this year, if our outlook comes true,” the Fed chair said.
Powell also said he is “not worried” about the bond market implying another cut before a pause, because some market participants expect inflation to fall faster than the Fed.
“If we see inflation come down more quickly, that will impact our policy position of course,” Powell said.
– Jesse Pound
Investment Analyst Says Fed Meeting Turned “A Little Doubtful”
The central bank is nearing the end of its rate hike campaign and this meeting was more dovish, according to Charlie Ripley, chief investment analyst at Allianz Investment Management.
Ripley said the lack of clarity about future interest rate movements indicates the Fed is nearing the end of its rate tightening cycle. After the rallies end, he said the central bank is likely to “remain tight while economic data sticks to policy.”
“The Fed is essentially speaking on both sides of the mouth because it has indicated that further increases are appropriate, but also acknowledged that it will take into account the cumulative amount of tightening in future policy decisions,” he said.
Ripley added that the slow pace of raising current interest rates to 25 basis points is a “clear sign” that the central bank is more confident that current economic policy is having its intended effects than tightening.
Ripley said the meeting was “a little dovish”.
– Alex Haring
Powell expects “soft” growth in 2023
Fed Chairman Jerome Powell is preparing for growth this year, albeit at a “fading pace.”
“My main condition is that there will be positive growth this year,” he said during a news conference on Wednesday.
– Samantha Sobin
Powell says it’s certainly possible that the federal funds rate will stay below 5%.
In response to a question from CNBC’s Steve Leizman, Chairman Jerome Powell said it was “definitely possible” for the Fed to keep its benchmark interest rate below 5%. The Fed recently raised the federal funds rate to a range of 4.50% to 4.75%.
Powell also said he still believes the Fed can bring inflation back to 2% “without really big deflation, or a big increase in the unemployment rate.”
– Jesse Pound
Powell says the deinflation process has begun
“We can now say I think for the first time the deinflation process has begun. We can see that and we really see it in commodity prices so far,” Fed Chairman Jerome Powell said in a press conference on Wednesday.
– Fred Imbert
Powell says it is “too early to declare victory” over inflation
Federal Reserve Chairman Jerome Powell said inflation is declining in some areas of the market, but it’s too early for the Fed to say the battle is won.
“It would be too early,” he said. “It would be too early to declare victory, or to think we’ve already got this.”
He said the process of reducing inflation is in its early stages, but “the job is not completely done”. He added that basic services, excluding housing, have not yet witnessed inflation.
Powell also expects inflation to continue to rise in housing services before it eases.
– Samantha Sobin
Powell says that more interest rate hikes in the future to lower inflation
Federal Reserve Chairman Jerome Powell said the central bank may make some additional interest rate increases to bring inflation down to its target.
“We’ve raised rates by four and a half percentage points, and we’re talking about two more rate increases to get to that level that we think is appropriately constrained,” Powell said. “Why do we think this might be necessary? We think because inflation is still very high.”
– Yun Lee
Evercore ISI says the Fed is giving itself some room for future policy moves
“We believe the committee is indicating that it has not seen enough yet to pause and remain geared towards two more increases – but leaves open the possibility that additional cumulative information that continues to support the fight against inflation over the next couple of months could lead the FOMC,” Krishna said. Guha, vice president of Evercore ISI, said on Wednesday that it would pause after March, and skip May, to see how second-quarter data develops before deciding whether or not to implement a final increase in June.
– Jeff Cox
Powell says the Fed has not taken a “restrained enough policy stance” yet
Despite the Fed’s aggressive rate hike campaign, the central bank has more work to do, according to Fed Chair Jerome Powell.
“I would say our focus is not on short-term moves but on the ongoing changes in the broader financial conditions,” he said during Wednesday’s news conference. “It’s our judgment that we haven’t yet adopted a tough enough policy stance, which is why we say we expect continued hikes.”
– Samantha Sobin
Powell says the economy is still in an “early stage” of deflation
Powell acknowledged that there have been positive signs in recent employment reports even as labor data remains strong, but said it’s too early to celebrate.
“It’s good that the inflation we’ve seen so far hasn’t come at the expense of the labor market,” Powell said, but added that the economy is still in an “early stage” of deflation.
He said the decline in commodity prices and data showing the recent downturn in the rental housing market is “a good story”.
However, he said the Fed “doesn’t see inflation yet” in the core services portion of inflation, excluding housing.
—Jesse Pound
An economist says inflation and the Fed’s fight against it is far from over
Jose Torres, chief economist at Interactive Brokers, suggested that market participants should not expect interest rate cuts later this year from the Federal Reserve.
“While inflation is running sharply, goods and services are actually accelerating, despite headlines screaming cooler inflation. In fact, the Cleveland Fed’s January CPI is up 7.6% annually. Furthermore, However, today’s job data indicates an incredibly resilient job market.” “Inflation is not over yet, nor is the Fed’s fight against it.”
– Michelle Fox
Powell begins with an aggressive stance against inflation
Jerome Powell began his press conference by reaffirming the central bank’s anti-inflationary stance.
Powell was repeating comments from previous appearances. He said the Fed remained “firmly committed” to lowering inflation, repeated statement language on continued interest rate increases, and stressed the problems that inflation could cause for consumers and the labor market.
“Without price stability, the economy works for no one,” Powell said.
– Jesse Pound
Boockvar expected Powell to be tough after minor statement changes
Peter Boockvar, chief investment officer at Blakeley Advisory Group, said the slight changes in the Fed’s statement should not come as a surprise to the market. However, he said Chairman Jerome Powell is likely to take a tough line against inflation in his press conference.
Bottom line, Powell was intent on making the FOMC data as uneventful as possible and today was really no different with the minor changes mentioned mentioning mild inflation but still a “high” rate. “I think Powell in his press will stay with his boots on the neck of inflation, but we know he’s not pressing on the floor anymore, perhaps again,” Boockvar said in a note.
– Jesse Pound
The Fed has been waiting too long to stop raising interest rates, says David Kelly of JPMorgan
David Kelly of JPMorgan Asset Management has long said that the Fed traditionally starts responding to economic conditions too late, goes too high with increments and stays too long.
“They say they recognize the long delays that monetary policy is affecting the economy, but with lower inflation and lower consumer spending, with lower industrial production, they’re still raising rates. That’s obviously a very long wait,” said Kelly, the firm’s chief global strategist.
the Post-meeting statement of the Federal Reserve Officials said officials will determine the extent of future hikes based on factors such as the effects so far of interest rate hikes, delays affecting policy, and developments in financial conditions and the economy.
– Michelle Fox
Portfolio manager says Fed may favor recession
Brandywine Global portfolio manager Bill Zoox isn’t convinced that the Fed is even trying to take a soft landing.
A soft landing would require the central bank to slow the economy and tame inflation while preventing recession.
“While they would never say that, they may prefer the reformist aspects of a recession and a proper bear market,” he said shortly after the Fed raised rates again.
– Michelle Fox
Something dovish: Fed says inflation has ‘modified somewhat’
The Federal Reserve pledged to continue combating high inflation on Wednesday, raising interest rates by 25 basis points. However, some market participants may have run into one part of the Fed’s recent statement that said inflation “Somewhat but still loud. “
This observation appears to be helping the averages of the major stocks break out of the session lows.
Fred Imbert, Jeff Cox
Fed Statement Still Refers to ‘Continued Increases’
The FOMC’s latest statement left some key words unchanged, which may have contributed to the immediate negative reaction to stocks.
The committee’s statement continues to say that “continued increases in the target range would be appropriate”.
Elsewhere, the new statement added that inflation “has moderated somewhat.”
See the rest of the changes here.
– Jesse Pound
Stocks drop to session lows after the Fed’s decision
Major US stock averages briefly fell to session lows on Wednesday after the Federal Reserve’s latest monetary policy announcement. The Dow Jones was last down more than 300 points, or 1%. The S&P 500 and Nasdaq fell 0.5% and 0.3%, respectively.
Fed up 25 basis points, but expects ‘continued’ increases
The Federal Reserve raised overnight lending rates by 25 basis points, or 0.25 percentage point, in line with investor expectations. The hike raised the Fed’s target range to 4.5%-4.75%, the highest level since 2007.
However, in its statement, the Fed maintained language noting that the FOMC still sees the need to “Continuous increases in target rangeMarket participants had hoped for some dilution of the statement, but the statement, which was approved unanimously, kept it intact.
– Jeff Cox
Where markets stand before the Fed
Here’s a snapshot of where financial markets stand heading into the Fed’s announcement at 2pm ET:
(Numbers as of 1:45 p.m. ET)
– Fred Imbert
Potential winners from the Fed halt
The Federal Reserve has been raising interest rates since March of last year, putting pressure on the broader market, just as it tries to head off a spike in inflation. However, some of the stocks that have been hit hard by rising interest rates could stand to gain big if the Fed hints at a pause.
CNBC Pro revisited stocks that were hit hard in the five trading days after each Fed rate hike last year, starting with the first quarter-point increase last March. Of those, we took the worst average performance over that five-day period for each of the seven price increases in 2022.
among those stocks Paramount GlobalAnd DisneyAnd Warner Bros. Discovery.
Michelle Fox, Fred Imbert
What do you expect from the Fed?
Markets have priced in the near 100% certainty that the Federal Open Market Committee will announce a 0.25 percentage point increase in the interest rate to conclude its first policy meeting in 2023.
What the markets don’t know is where the Fed is going from here. Traders are betting that the central bank will raise a quarter point Back in March, stop, stop for a few months, and then start cutting back at the end of the year.
Realizing that the fight against inflation is not over yet, Mr. President Jerome Powell He could backtrack on the idea of a more flexible Fed sometime sooner in the future.
– Jeff Cox
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