The Federal Reserve left the Fed funds rate unchanged as expected. As expected, the gold and crypto market reacted to the decision with an increase. Fed Chairman Jerome Powell speaks at a press conference after the interest rate decision. At the post-decision press conference, Powell explains his decision to keep the federal funds rate, which is the policy rate, constant at 5.25%-5.5% and answers questions.
Fed Chairman Jerome Powell speaks…
cryptokoin.comAs you follow from , the Fed left the policy rate constant. Therefore, this decision was in line with expectations. However, when the Fed will start reducing interest rates is important for the markets. In addition, it is also a matter of curiosity how many interest rate cuts there will be this year. JPMorgan and Goldman Sachs believe the Fed will cut interest rates in July. Wells Fargo predicts that the Fed will cut interest rates in September. Bank of America, which is the strictest, doesn’t expect any cuts until December. Amidst these expectations, the markets are carefully listening to the speech of Fed Chairman Jerome Powell, who appeared in front of the cameras after the interest rate decision. Here are the highlights from Powell’s speech:
Powell: Further progress on inflation not guaranteed
- The economy has made significant progress towards dual goals.
- Inflation fell significantly last year but remains very high.
- Further progress in inflation is not guaranteed; The path is unclear.
- The restrictive stance put downward pressure on inflation and the economy.
- Risks to achieving bilateral targets became better balanced last year, but there was no progress on inflation.
- We are very careful about inflation risks.
- Domestic private final purchases were as strong as the second half of last year.
- This is an important fundamental signal for demand.
- The labor market remains relatively tight.
- Nominal wage growth has decreased over the past year, but labor demand still exceeds supply.
- This year’s inflation data was higher than expected.
- Long-term inflation expectations remain well anchored.
- Our policy actions are guided by our goals.
- Monetary policy actions are driven by dual mandates.
Powell: Gaining confidence on inflation will take longer than expected.
- The economic outlook is uncertain.
- We do not think it would be appropriate to cut interest rates until we have greater confidence that inflation is heading towards 2%.
- Inflation data so far this year have not given us this confidence.
- It will probably take longer to gain more confidence than previously expected.
- Reducing policy too soon or too much, or too late or too little, both have risks.
- Politics is well positioned to deal with the risks and uncertainties we face.
- We will make decisions by evaluating them at every meeting.
- Slowing the QT rate does not mean that our balance sheet will shrink less than it normally would.
- Slowing down the exit rate will provide a smooth transition for money markets.
- The decision to slow outflows will reduce the likelihood of stress in money markets.
Fed Chairman: It is unlikely that the next policy rate move will be an increase.
- I think the policy is restrictive and puts pressure on demand.
- It is possible to see this in the labor market.
- I saw evidence of this in the JOLTS report today.
- Turnover and hiring rates have normalized.
- Over time we concluded that the policy was restrictive enough to reduce inflation to 2%.
- The data will show whether this is the case.
- The next policy rate move is unlikely to be an increase.
- The policy focus is how long to keep the policy restrictive.
- To raise rates, we would need to see evidence that the policy is not restrictive enough, which is not what we are seeing.
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