Governor Jerome H. Powell discusses monetary policy accommodation, risk-taking, and spillovers during the policy panel on monetary policy spillovers and cooperation in a global economy: GP_IF_111414_1705
The Federal Reserve, led by FOMC Chairman Jerome Powell, is still wary about a flare-up of inflation. The Wall Street Journal’s Nick Timiraos reports:
The Federal Reserve signaled it was thinking about when to lower interest rates but hinted a cut wasn’t imminent when it held rates steady at its first policy meeting of the year on Wednesday.
The central bank held its benchmark federal-funds rate steady in a range between 5.25% and 5.5%, the highest level in more than two decades, as it awaits more convincing evidence that a sharp downturn in inflation at the end of last year will endure.
“It’s a highly consequential decision to start the process” of lowering interest rates “and we want to get that right,” said Fed Chair Jerome Powell at a news conference. “We’ve made a lot of progress on inflation. We just want to make sure that we do get the job done in a sustainable way.”
For most of January, investors in interest-rate futures markets have placed roughly 50% odds that the central bank would cut rates at its next meeting, March 19-20. But Powell volunteered on Wednesday that officials didn’t think a March cut was likely.
“I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting” to justify a rate cut, “but that’s to be seen,” he said.
Stock indexes ended lower Wednesday, with the S&P 500 down 79.32 points, or 1.6%. The index, which on Monday closed at an all-time high, registered its biggest decline since September. Yields on the 10-year Treasury note declined 0.091 percentage point to close at 3.965% after New York Community Bancorp reported a loss and slashed its dividend, igniting new jitters about the health of regional lenders.
The market-based probability of a March cut fell to around 35% on Wednesday afternoon, according to CME Group. “March is not the base case and in order for it to be a truly live meeting, the data has got to disappoint materially,” said Michael de Pass, global head of rates trading at Citadel Securities.
Read more here.
If you’re willing to fight for Main Street America, click here to sign up for the Richardcyoung.com free weekly email.
