Fed Powell - Chairman of the Federal Reserve - answers reporters' questions on the central banks policy and outlook following the decision to keep rates unchanged at 4.25% – 4.50%. The decision was largely expected.There were two dissents which is the first time two Fed officials dissented since 1993.
A recap of the statement said:
No rate change as expected; Waller and Bowman dissented, voting for a 25 bps cut.
Kugler did not vote at this meeting. That was preannounced.
The Fed said the economic outlook remains elevated, but dropped the June phrase that it “has diminished.”
Growth was described as moderating in H1, softening from the prior “solid pace” language.
Unemployment remains low, labor markets solid, and inflation somewhat elevated.
No hints at future cuts; the Fed remains in a data-dependent, wait-and-see mode.
The Fed repeated it will “carefully assess incoming data, the evolving outlook, and the balance of risks.”
The USD retraced a little bit the gains seen earlier today, but the dollar remains nearer the high. The US stocks remain higher with the S&P up 0.26% and the NASDAQ index up 0.50% going into the press conference. Remember, Microsoft and Meta will report their earnings after the close. Shares of Meta are currently down -0.02%. Shares of Microsoft are up 0.03%.
The US 2-year yield is at 3.879% up 0.4 basis points. The 10-year yield is 1.8 basis points at 4.346%.
Gold is lower by $29 or -0.87% at $3298 ahead of the press conference. Bitcoin is down $170 at $117,710
To watch the press conference LIVE, click below:
Highlights from the Fed Chair Press conference will be added below. IN the prepared remarks:
- Economy is in a solid position
- inflation somewhat above target.
- Believe current stance of policy leaves us well-positioned to respond in a timely way
- Moderation in growth reflects slowdown in consumer spending.
- Activity and housing sector remains week.
- Unemployment is low and has remained in narrow range.
- Wide set of indicators suggest jobs market is near its maximum at the moment.
- Expects PCE up 2.5% and core up 2.7% in 12 months through June.
- Most measures of long-run inflation expectations are consistent with that goal.
- Tariffs have exerted pressure on some goods but wider impact unertain.
- A reasonable base case is that inflation risks are a one-time increase in price level, but that is uncertain.
- Sees current stance as appropriate to guard against inflation risks.
- On track to wrap up policy review by late summer.
Q&A begins:
- We are modestly restrictive.
- Inflation is running a bit above 2% even excluded the impact of tariffs.
- Economy is not behaving as if rates are holding back economy inappropriately
- Expects to have more information in the coming months.
- We have made no decision about September.
- We will get two rounds of employment inflation data before the September meeting.
- We will be taking that information into consideration when we make that decision at that time.
- Statement about uncertainty reflects changes since last meeting. It had not this minister further percent June meeting.
- Still a ways away from seeing where things settle.
- It has been a very dynamic time for the trade negotiations.
- Many uncertainties left to resolve: feels like there's much more to come.
- GDP and PDFP (private domestic final purchases) numbers came in right about where we expected them.
- Very similar to where they were a year ago job, job creation has slow but still has supply for workers
- Demand and supply for workers are coming down at about the same rate
- We do see downside risk in the labor market.
- Main number you have to look at now is the unemployment rate.
- Breakeven number for job creation has come down.
- On dissents, what you want is a clear explanation and we had that today.
- People thought carefully about this and put their positions out there.
- Inflation is modestly above target. Unemployment is at the target.
- My own estimate is that policy is modestly restrictive.
- We know the neutral rate by its works. Will be making that judgment as we go.
A snapshot of the markets:
- Dow industrial average -20 points or -0.04%
- S&P index +11.4 points or 0.18%
- NASDAQ index up 94.94 points or 0.45%
- 10 year yield 4.364%, +3.6 basis points. Two year yield 4.907%, +3.3 basis points.
Continuing with the press conference:
- Tariffs are starting to show up in some consumer prices
- We think we have a long way to go nowhere will be on in the impacts of the tariffs.
- We will make sure this does not turn into serious inflation.
- Trying to accomplish our goal in an efficient manner.
- There may be some stimulative effect from tax bill, but not major one.
- We do not consider cost to government of our rate changes.
- If we did it would not be good for our credibility or for the credibility of fiscal policy.
The S&P index has now turned negative. It is down -0.4%. The NASDAQ index is still up but has prepared its gains to a gain of 50 points or 0.25%. The Dow Industrial Average is now down -91 points or -0.20%.
The USD has continued its move to the upside as Powell speaks on the decision to keep rates unchanged.
EURUSD moves below the 50% midpoint of the move up from the May low at 1.14475, and now targets the 100 day moving average at 1.13889. The price is currently trading at 1.1431
GBPUSD: The GBPUSD moves down to test the 50% midpoint of the move up from the April low at 1.32475. The low price of just reached 1.3243. The current price is trading at 1.3248.
USDJPY: The USDJPY moves above its 50% midpoint at 149.036 and next looks toward the 200 day moving average at 149.523. It is currently trading at 149.23.
Continuing the press conference:
- Pleased the President said that to see the project completed as soon as possible. It was a good visit.
- Consumers will pay for some of the cost of tariffs, retailers will pay some of it.
- Goods inflation moving us away a bit from target, but not very far away from target
- The best thing we could do for housing is to have 2% inflation and maximum employment
- We have risks to both sides of our goals. Inflation will be higher and higher unemployment.
- A reasonable base case is that this will be a one time impact on inflation.
- Quite a lot of data coming in before the next meeting.
- The Fed doesn't speak to the dollar, only the treasury speaks to the dollar.
- Dollar has not been a major focus on discussions. (I often wonder why but…)
- Government data is the gold standard, and we need to be good and to rely on it.
- Having an independent central bank has served the public well.
- Consumer spending has been very strong for the last few years and now maybe it has finally slow down. It is at a healthy level and performance of credit has been good
- GDP is hard to interpret because of net exports swings.
- Private sector job creation last report had come down a bit. (Recall that most of jobs were in government. The new jobs report will be released on Friday).
- Totality of labor market data shows solid market but you have downside risks.. We are paying close attention to it.
US stocks have now turned negative. The NASDAQ index is down -0.21%. The S&P index is down -0.38% and the Dow industrial average is down -0.66%. Powell speaks about slower growth from consumer spending, and lower private sector employment growth.
- Expects dissents from the Fed to be explained in the next day or so.
- It's not surprising that there are differences.
- We need to see the data judgments on both inflation and employment.
Powell ends press conference at 3:14 PM ET.
- Dow industrial average down -250 points or -0.56% at 44386.
- S&P index -15 points or -0.25% at 6354.54.
- NASDAQ index -1 point or -0.01% to 21096.
- Two year yield 3.930%, +5.7 basis points
- 10 year yield 4.368%, +4.0 basis points
