Powell’s focus is on the labor market, Gary Cohn says
Former Goldman Sachs chief operating officer Gary Cohn said Fed Chairman Jerome Powell made it clear in his press conference that the data the Fed is most closely watching is the employment data.
“He really gives you both sides of the argument back and forth,” said Cohn, a former economic adviser to the Trump administration. “The only thing he keeps talking about is the labor market. At this point, it feels like we’re just dependent on labor. “
Powell says don’t expect rate cuts in 2023
Jerome Powell said he doesn’t expect the Fed to cut interest rates this year, as some leading strategists have predicted.
“Given our outlook, if our outlook holds true, I don’t think we will cut rates this year,” the Fed chair said.
Powell also said he was “not concerned” by the bond market signaling one more rate cut before pausing, as some market participants expect inflation to fall faster than the Fed.
“If we do see inflation come down faster, that of course affects our policymaking,” Powell said.
— Jesse Pond
Investment strategist says Fed meeting leans towards ‘slightly dovish’
Charlie Ripley, senior investment strategist at Allianz Investment Management, said the central bank is nearing the end of its rate hike campaign and was more dovish at this meeting.
Ripley said the uncertainty about the future direction of interest rates indicates that the Fed is nearing the end of its rate tightening cycle. After the rate hikes are over, the central bank is likely to “hold fire while economic data catches up with policy,” he said.
“The Fed is basically playing both sides of the aisle as they signal that further hikes are appropriate but also acknowledge that they will consider the cumulative amount of tightening in future policy decisions,” he said.
Ripley added that the current slowdown in the pace of rate hikes to 25 basis points is a “clear sign” that the central bank is more confident that current economic policy is having its expected tightening impact.
All in all, Ripley said the meeting was “slightly dovish.”
— Alex Haring
Powell sees ‘slower’ growth in 2023
Federal Reserve Chairman Jerome Powell is bracing for growth this year, albeit at a “moderate pace.”
“My base case is positive growth this year,” he told a news conference on Wednesday.
— Samantha Subin
Powell says it’s ‘certainly possible’ for fed funds rate to stay below 5%
Responding to a question from CNBC’s Steve Lisman, Chairman Jerome Powell said it was “certainly possible” the Fed would keep its benchmark interest rate below 5%. The Fed’s recent hikes have brought the federal funds rate in a range of 4.50% to 4.75%.
Powell also said he still thinks the Fed can bring inflation back down to 2% “without a really deep recession and without a really significant increase in unemployment.”
— Jesse Pond
Powell says deflationary process has already begun
“We can now say that I think the deflationary process has already begun. We can see that, and we do see it in commodity prices so far,” Federal Reserve Chairman Jerome Powell told a news conference on Wednesday said.
— Fred Imbert
Powell says ‘too early to declare victory’ on inflation
Federal Reserve Chairman Jerome Powell said inflation was slowing in some parts of the market, but it was too early for the central bank to say the battle had been won.
“It’s still early days,” he said. “It’s too early to declare victory or to think we’ve really achieved victory.”
The deflationary process is in its early stages, but “the job is not quite done,” he said. He added that core services other than housing were not yet deflationary.
Powell also expects inflation in housing services to continue rising before falling.
— Samantha Subin
Powell says more rate hikes ahead to bring down inflation
Federal Reserve Chairman Jerome Powell said the central bank is likely to hike rates a few more times to bring inflation down to its target level.
“We’ve raised rates by four and a half percentage points, and we’re talking about a few more hikes to get to a level that we think is appropriately constrained,” Powell said. “Why do we think that might be necessary? We think it’s because inflation is still very high.”
Evercore ISI says the Fed is allowing some leeway for future policy moves
“We think the committee is signaling that it hasn’t seen enough signs to weigh a pause in rate hikes and is still leaning toward two more hikes — but further build-up of messages that will continue to be supportive of deflation over the next two months may Leading to the FOMC’s outlook being open to pausing after March, skipping May and seeing how the second quarter data evolves before deciding whether to implement a final rate hike in June,” Evercore ISI vice-chairman Krishna Guha said on Wednesday.
— Jeff Cox
Powell says Fed hasn’t taken a ‘tough enough policy stance’ yet
Federal Reserve Chairman Jerome Powell said the central bank has more work to do despite its aggressive rate hikes.
“I would say our focus is not on short-term developments but on ongoing changes in broader financial conditions,” he told a news conference on Wednesday. position, which is why we said we expect to continue raising rates.”
— Samantha Subin
Powell says economy still in ‘early stages’ of easing inflation
Powell acknowledged that there were positive signs in the recent jobs report, although the labor force data remained strong, but said it was too early to celebrate.
“It’s a good thing that the deflation we’ve seen so far has not come at the expense of the labor market,” Powell said, but added that the economy was still in the “early stages” of easing inflation.
He said falling commodity prices and data showing recent weakness in the rental housing market was a “good story”.
However, he said the Fed “hasn’t seen deflation yet” in the inflationary core services sector, which excludes housing.
Inflation and the Fed’s fight against inflation isn’t over, economists say
Jose Torres, senior economist at Interactive Brokers, said market participants should not expect the Fed to cut rates later this year.
“While commodities are experiencing sharp deflation, commodities and services are actually accelerating despite headlines screaming cooling inflation. In fact, the Cleveland Fed’s recent forecast for headline CPI for January shows an annualized rate of 7.6%. Additionally, today’s job vacancy data shows an incredibly resilient labor market,” he said. “Inflation is not over, and neither is the Fed’s fight against inflation.”
Powell begins aggressive stance on inflation
Jerome Powell began his press conference by reiterating the central bank’s stance on fighting inflation.
Powell repeated comments made in previous appearances. He said the Fed remained “firmly committed” to reducing inflation, reiterating language in its statement about continued rate hikes and highlighting the problems inflation could pose for consumers and the labor market.
“Without price stability, the economy is not working for anyone,” Powell said.
— Jesse Pond
Boockvar says expect Powell to be hawkish after minor revisions to statement
Peter Boockvar, chief investment officer at Bleakley Advisory Group, said the small change in the Fed’s statement shouldn’t surprise markets. However, he said Chairman Jerome Powell was likely to take an aggressive stance on inflation at the news conference.
At the end of the day, Powell has always intended to keep the FOMC statement as calm as possible, and today did make a slight departure from referring to slowing inflation but still “high” rates. I believe Powell will continue to put his boot on the neck of inflation under his pressure, but we know he really isn’t pressing anymore, and maybe one more time,” Boockvar said in a note.
— Jesse Pond
JPMorgan’s David Kelly says Fed paused rate hikes for too long
JPMorgan Asset Management’s David Kelly has long said the Fed has traditionally started reacting too late to economic conditions, raising rates too far and for too long.
“They say they acknowledge that there is a long lag in the impact of monetary policy on the economy, but they’re still raising rates as inflation falls, consumer spending falls, industrial production falls. That’s clearly waiting too long,” Kelly said, the firm chief global strategist.
Officials will base their decision on the magnitude of future rate hikes on factors including the impact of rate hikes so far, the lag in policy impacts, and developments in financial conditions and the economy, the Fed said in a statement after the meeting.
Fed may prefer recession, says portfolio manager
Brandywine Global portfolio manager Bill Zox doesn’t believe the Fed is even trying a soft landing.
A soft landing would require the central bank to slow the economy and curb inflation while preventing a recession.
“While they would never say that, they probably prefer the restorative aspect of a recession and a proper bear market,” he said shortly after the Fed raised rates again.
Dovish Stuff: Fed Says Inflation Has ‘Easy’
The Fed raised interest rates by 25 basis points on Wednesday, vowing to continue fighting high inflation. However, some market participants may focus on part of the Fed’s latest statement, which said that inflation “has eased but remains elevated.”
The comments appeared to help the major indexes off session lows.
— Fred Imbert, Jeff Cox
Fed statement still points to ‘sustained increases’
The latest FOMC statement left some key language unchanged, which could lead to an immediate negative reaction in stocks.
The committee’s statement remains that “continued increases in the target range will be appropriate”.
Elsewhere, the new statement did add that inflation had “moderated somewhat”.
Check out the rest of the changes here.
— Jesse Pond
Stocks fall to session lows after Fed decision
Major U.S. stock indexes fell to session lows on Wednesday after the Federal Reserve released its latest monetary policy statement. The Dow was last down more than 300 points, or 1%. The S&P 500 and Nasdaq fell 0.5 percent and 0.3 percent, respectively.
Fed raises rates by 25 basis points, but expects ‘continued’ hikes
The Federal Reserve raised its benchmark overnight lending rate by 25 basis points, or 0.25 percentage points, in line with investor expectations. The hike brought the Fed’s target range to 4.5%-4.75%, the highest level since 2007.
However, in its statement, the Fed went on to point out that the FOMC still sees a need for “sustained increases in the target range.” Market participants had been hoping for some softening of the language, but the unanimous statement remained unchanged.
— Jeff Cox
Where Markets Lead the Fed
Here’s how financial markets looked ahead of the Fed’s statement at 2 p.m. ET:
(Numbers as of 1:45 p.m. ET)
— Fred Imbert
Potential winners of the Fed’s pause
The Federal Reserve has been raising interest rates since last March, weighing on the broader market as it tries to ward off rising inflation. However, some of the hardest-hit stocks could be big winners if the Fed signals a pause in rate hikes.
CNBC Pro takes a look at the worst-hit stocks in the five sessions following each Fed rate hike last year, starting with the first-quarter hike last March. Of these, for the seven rate hikes in 2022, we have the worst median performance over this five-day period.
Among these stocks are Paramount Global, disneyand Warner Bros.Discover.
—Michelle Fox, Fred Imbert
Expectations for the Fed
The market is pricing in an almost 100% certainty that the FOMC will announce a 0.25 percentage point rate hike to wrap up its first policy meeting of 2023.
What is uncertain in the market is where the Fed will go. Traders are betting the central bank will raise rates by another 25 basis points in March, then pause, pause for a few months before starting to cut rates by the end of the year.
Realizing that the battle with inflation is far from over, Fed Chairman Jerome Powell may push back on the idea of an easy Fed so soon in the future.
— Jeff Cox