Federal Reserve Kept Rates at 22-Year High 5.25-5.50% Range as Expected

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    Helmholtz Watson

    Powell opening statement:

    Without price stability, the economy doesn’t work for anyone
    We’ve covered a lot of ground and the full effect of our tightening has yet to be felt
    Still a strong pace of jobs growth
    Labor demand still ‘substantially’ exceeds supply
    The process of getting back to 2% inflation “still has a long ways to go”
    Strongly committed to getting inflation back to target
    We have been seeing the effects of our policy on demand, particularly in most rate-sensitive sectors. It will take time to be felt

    Helmholtz Watson

    Powell Q&A:

    Inter-meeting data was broadly in line with our expectations
    CPI was a bit better than expectations
    We haven’t made any decisions about future meetings
    We’re looking for moderate growth, we’re looking for a better balance in supply and demand, particularly in labor market
    We get 2 more jobs and CPI reports before the Sept meeting
    It is certainly possible that we would hike in Sept, also possible we would hold
    June CPI is just one reading

    Helmholtz Watson

    US stocks up as Powell stresses data dependency

    The major stock indices have pushed to the upside as Powell stresses data dependency.

    Dow Industrial Average top 170 points or 0.48% at 35609
    S&P index is up 11.2 points or 0.24% at 4578.61
    NASDAQ index is back in positive territory with a gain of 38 points or 0.27% at 14183


    The EURUSD has moved higher in trades above its 100-hour moving average at 1.10895. It trades at 1.1098. Stay above the 100-hour moving average is more bullish
    The GBPUSD is also higher and now has surpassed its 200-hour moving average at 1.29438. It trades at 1.2951. Stay above the 200 hour moving averages more bullish
    The USDJPY is lower and looks to test its 200-hour moving average at 140.019. It trades at 140.09 currently
    The USDCHF tumbles below its 200-hour moving average of 0.86257. The current price trades at 0.8606. The lows for the month of July extended down from 0.8554 to 0.8565. Those are the next targets on further selling.


    FOMC Minutes:

    Most participants said inflation risks could require further interest rate hikes.
    Most participants saw continued ‘significant’ upside inflation risks.
    A number of participants warned of risks of accidentally tightening policy too much
    Uncertainty of U.S. economic outlook remains elevated; future Federal Reserve policy decisions to be driven by the totality of data from the July 25-26 meeting.
    Most participants said inflation risks could require further interest rate hikes.
    A couple of participants favored holding interest rates steady at the July meeting.
    A number of participants saw economic risks becoming more balanced.
    Participants said inflation was ‘unacceptably high,’ and more evidence is needed to be confident that price pressures are ebbing.
    Participants said a gradual slowdown in economic activity appeared to be happening.
    Participants still saw below-trend growth and a softer labor market as necessary for restoring economic balance.
    Amid uncertainty about monetary policy lags, participants said rate hikes are working as intended.
    The banking system is ‘sound and resilient,’ but tighter credit conditions are likely to weigh on the economy.
    Staff no longer see the economy entering a mild recession this year and now predict below-trend growth in 2024 and 2025.
    Participants said the labor market is still ‘very tight,’ although signs are emerging that labor demand is in better balance.

    Helmholtz Watson

    The Federal Reserve kept rates unchanged in a target range of 5.25-5.50% in unanimous vote at their September FOMC and updated economic projections. T
    [See the full post at: Federal Reserve Kept Rates at 22-Year High 5.25-5.50% Range as Expected]

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