Fed Powell: Economy is growing solid path

The US Federal Reserve Chair Jerome Powell said in a press conference today that the US economy is growing solid path and the inflation has come down. The central bank kept the rates unchanged at its meeting.

– Readings like today (inflation) is a good step, but it is only one datapoint, he said and was referring to more economic data to be included to the rate cut desicion. What is the trend of these, he asked.

As the Fed has two monetary policy targets, maximum empolyment and price stability, the central bank is watching closely also the labour and job data.

He said that it has taken longer to get the needed confidence related to the first rate cut as the key economic indicators have varied a lot. He reminded also that the whole rate path matters.

The Fed is to publish the big banks stress tests later this month and according to him “banking sector seems to be in good shape.”

Fed Powell: Inflation is not yet done

The chairman of US Federal Reserve Jerome Powell said on Wednesday that the US inflation is not yet done. He was speaking at the Stanford Business School in California.

– Over the past year, inflation has come down significantly but is still running above the Federal Open Market Committee’s (FOMC) 2 percent goal. In February, headline inflation was 2.5 percent over the past 12 months based on the personal consumption expenditures (PCE) index. A year earlier, it was 5.2 percent. Core inflation, which excludes the volatile food and energy components, stood at 2.8 percent; a year ago, it was 4.8 percent. While this progress is welcome, the job of sustainably restoring 2 percent inflation is not yet done, he said.

– The recent data do not, however, materially change the overall picture, which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2 percent on a sometimes bumpy path, he described.

-We have held our policy rate at its current level since last July. As shown in the individual projections the FOMC released two weeks ago, my colleagues and I continue to believe that the policy rate is likely at its peak for this tightening cycle. If the economy evolves broadly as we expect, most FOMC participants see it as likely to be appropriate to begin lowering the policy rate at some point this year, he stated.

The markets have been delaying the expected rate cuts because of the sticky core inflation in the beginning of this year. First the rate cuts were timed to start in March, but now the expectation is in June.

More information of the consumer price development is to be released next week with the March CPI on Wednesday.

Fed signals rate cuts “at some point of the year”

The Federal Reserve Chairman Jerome Powell said that he expects the rate cuts during this year ” at some point” if the economy evolves as expected. He was having his monetary policy hearing in Congress today.

– We believe that our policy rate is likely at its peak for this tightening cycle. If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year. But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured. Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to 2 percent, he reminded though.

Fed Powell: Central bank is not having political discussions of rate decisions

The US Federal Reserve Chair Jerome Powell said in CBS’s 60 minutes show on Sunday that the Fed has not discussed with politicians of the coming monetary policy decisions and will not do it in the future either.

Powell said also that one reason for the US economy to do so well after the pandemic is that the US economy is dynamic and innovative.

He said the economy growth has picked up during the last quarter of 2023, the unemployment rate is historic low, below 4% and inflation has come down towards the 2 % target over time.

He estimated that the US economy is not going to see the real estate crises as in the last financial crises in 2008.

– This is not likely, he said.

Related to local small regional banks he estimated that there might be closures and mergers in the future. The Silicon Valley Bank was one of the banks that the Central Bank was forced to take over and sell back to the markets last year.

In the Fed’s press conference last week on Wednesday Jerome Powell said that the inflation has eased but the central bank needs more evidence before it can make the first rate decision. He said also that March rate cut is not likely.

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Fed Powell: FOMC is proceeding carefully

According to US Federal Reserve Chairman Jerome Powell, the central bank monetary committee is proceeding carefully. He was speaking at the Economic Club of New York on Thursday.

– A range of uncertainties, both old and new, complicate our task of balancing the risk of tightening monetary policy too much against the risk of tightening too little, he said.

He said the Fed is determined to turn the inflation back to 2 % level over time and that the FOMC is proceeding carefully. The monetary decisions are based on the incoming data.

FED Powell: US economy stronger than earlier expected

The Chairman of the US Federal Reserve Jerome Powell said in the press conference on Wednesday that the US economy has shown to be stronger than earlier estimated. The Central Bank raised the growth outlook for this year from 1,0% to 2,1%.

According to him, one of the factors behind the strong economy has been the strong balance sheets of households and corporates. One of the risk factors is though the high energy price which has impact on consumer spending. Also the autostrikes and student debt payments will have their impact on the economy.

He reminded that the future monetary actions must be carefully proceed in order to keep the softlanding of the economy. Price stability is number one and “we have to do it” he said.

Fed Powell: Inflation is still too high – prepared to raise rates

The Federal Reserve Chairman Jerome Powell said in Jackson Hole event, Wyoming, on Friday that the inflation is still too high and that the Central Bank is prepared to raise rates further.

– The message is that it is the Fed’s job to bring inflation down to our 2% goal and we will do this, he said.

– We have tightened policy significantly over the past year. Altough the inflation has come down from its peak – it remains too high, he stated.

– We are prepared to raise rates further if appropriate and hold policy at restrictive level until we are confident that inflation is moving sustainably down, he said.

Powell reminded that the Russian war against Ukraine has been primary driver of the changes in headline inflation since early 2022.

– Restoring price stability is essential to achieving both sides of our dual mandate, he said.

US Powell: Fed is not to cut rates this year

The US Federal Reserve Chairman Jerome Powell said in the Central bank’s press info on Wednesday that the Fed is not going to cut rates this year.

According to him, rate cuts are possible when the Central bankers have got enough economic data to be confident that the inflation will be 2 % over the longer term.

– And this is now estimated to happen in 2025, he said.

Powell said the inflation has now moderated but it has a long way to go. The Fed decided to raise the federal funds by 25 basis points to 5,25 – 5,50% on Wednesday.

– Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation, the Central bank said in the release.

The stock markets closed mixed after the Fed decision. Dow Jones closed up 0,23% to 35.520 points, while S&P 500 index lost 0,02% to 4566 points and Nasdaq lost 0,12% to 14.127 points.

Powell: Rate hikes later this year – inflation persists

The Chairman of the Federal Reserve Jerome Powell said on Wednesday press conference that further rate hikes are likely to occur later this year. The FOMC Committee decided to pause the hikes on Wednesday meeting to better estimate the impact of the monetary policy via incoming economic data.

– Looking ahead, nearly all Committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down to 2 percent over time, he said in the opening.

– Inflation pressures continue to run high and the process of getting inflation back down to 2 percent has a long way to go, Powell said.

The FOMC meeting decided also to continue to reduce tthe Central Banks’s security holdings after the pandemic relief.

FED Powell: Wages are not principal drivers for inflation

The US Federal Reserve Chairman Jerome Powell said on 3rd May press conference that wages are not principal drivers for inflation. He was speaking about the latest Fed decision to raise rates by 25 basis points and the Fed’s targets about maximum employment and 2% inflation over time.

According to him, the Fed will continue to monitor the price stability and target the 2 % inflation over time. Powell said the governors are working with the target, but noticed it will take its time.

He reminded the Fed will make monetary decisions by incoming data meeting be meeting. He confirmed also that slowing down the rate hike pace was a right move but declined to further estimate if the 6 weeks interval is enough for data analysis or does it need more time. The next monetary FOMC meeting will be in June.

Powell estimated also that the recent banking turmoil in the US regional banks will tighten the regulatory actions and supervision further. According to him, it is wise to identify the things and to make sure it will not happen again.