This week, the Federal Reserve Committee elected to keep the Fed Funds Rate the same. Chairman Powell indicated there was broad approval from the Board to leave rates neutral. In his press conference, Chairman Powell said that:
Job Market:
- Unemployment is stable after previous softening
- Job gains remained low
- Softer demand for new employees
- Data suggests stabilization and cooling. Outlook for economic activity may have positively affected job market.
Inflation:
- Somewhat elevated but eased
- Core PCE rose 3.0%
- Spending resilient
- Housing weak
- Maintain 3.5-3.75% Fed Fund Rate
- Once effects of tariff increases have passed through will know more
The Future:
- Rate cut pushback – better growth, solid growth footing, inflation as expected…. stronger forecast
- Timing for future cuts will be meeting by meeting
- Will let the data “light the way”
No Comment:
- Decision for remaining as a governor on Fed Reserve Board
- Currency, dollar, markets
- Anything to do with lawsuits
Considering Chairman Powell’s comments, we continue to be in a holding pattern, with some optimism of economic growth and continued elevated inflation. The Fed watch now shifts to the President’s appointment of a new chairman. Regardless of who is chosen, all decisions are made by the entire board with every member having an opinion, ensuring that Fed independence should remain constant.
