FED President Speaks: Here are the Critical Points from the Speech!

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The Federal Reserve left the Fed funds rate steady, in line with expectations. Fed Chairman Jerome Powell speaks at a press conference after the interest rate decision. Chairman Jerome Powell explains his decision to leave the policy rate, that is, the federal funds rate, unchanged in the range of 5.25%-5.5% and answers questions at the post-meeting press conference.

Fed left interest rates steady in line with expectations

cryptokoin.comAs you follow from , the Fed left the policy rate unchanged. The US Federal Reserve (Fed) announced on Wednesday that it left the policy rate, the federal funds rate, unchanged at 5.25%-5.5% following its March meeting. This decision came in line with market expectations.

In its policy statement, the Fed reiterated that it does not expect to cut interest rates until there is greater confidence that inflation will move sustainably towards its 2% target. Meanwhile, the revised Economic Projection Summary showed that the authorities foresee a 75 basis point reduction in the policy rate in 2024, as in December.

Highlights from Fed Chairman Jerome Powell’s speech…

Jerome Powell began his speech by stating that inflation has fallen significantly. However, he underlined that there is no guarantee that progress will continue. Here are the highlights from Fed Chairman Powell’s speech:

  • The economy has made significant progress and inflation has fallen significantly. But continued progress is not guaranteed. The path forward is unclear.
  • GDP was supported by strong consumer demand as well as improving supply chains.
  • High interest rates have put pressure on commercial fixed income investments.
  • Respondents revised their GDP forecasts upward.
  • The labor market remains relatively tight, but supply and demand are coming into better balance.
  • Nominal wage growth is slowing. Labor demand still exceeds labor supply.
  • FOMC participants expect the rebalancing in the labor market to continue.
  • Inflation is still above our target. Long-term inflation expectations remain firmly anchored.
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Highlights from Fed Chairman Jerome Powell’s speech…

  • Risks to targets become better balanced.
  • Our policy rate is probably at its peak.
  • We’re likely to cut interest rates at some point this year. However, the outlook is uncertain and we remain cautious about the risks.
  • We are prepared to keep interest rates high for longer if necessary.
  • We will carefully evaluate incoming data to decide on policy.
  • We are committed to both sides of the dual mandate.
  • We need more confidence that inflation will come down sustainably before we cut interest rates. We will make decisions by meeting.
  • It is likely that unexpected weakness in the labor market will also require a response.
  • Our predictions are not a plan, we will adjust according to conditions.

Powell speech: January and February inflation did not increase our confidence

  • We also discussed the balance sheet at this meeting. We discussed issues related to slowing down the rate of decline in assets.
  • Our general feeling is that we will start exiting very soon. Slowing the pace of exit will ensure a smooth transition and reduce the likelihood of money market stress.
  • It will limit the risk of fluctuation in the money market.
  • The economy is performing well.
  • The forecasts do not imply higher tolerance for inflation.
  • Inflation data came in slightly higher than expected. However, we continue to make good progress in reducing inflation.
  • There is confidence that low rent increases in the housing market will emerge over time.
  • I assume we will continue to see commodity prices continue towards a new equilibrium.
  • The risks are truly two-sided right now. This is why the first interest rate cut is important.
  • It makes more sense to approach this question carefully and let the data speak.
  • January CPI and PCE figures were quite high. However, it is likely due to seasonal adjustments.
  • January inflation figures were quite high, but there is reason to think there are seasonal effects. February was also high, but not too high. Taking January and February together did not change the overall story.
  • It will be a bumpy road. January and February inflation figures did not increase our confidence. We will not overreact or ignore these two months of data.

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