Fed chair Powell starts conference after the Fed lowered interest rates by 25 bps to 4.5% in line with expectations on Wall Street. US indices lose after the Powell press conference starts; US100 is down almost 1%, US500 declines 0.6%; US dollar strengthens. Here is the transcription from the Powell's media conference.
Fed chair, Powell remarks
-
We can be more cautious as we consider more adjustments. Reducing policy restraint too slowly could unduly weaken the economy and employment.
- Risks to achieving goals are roughly in balance. Total PCE probably rose 2.5% in the 12 months ending in November. The labor market is not a source of inflation pressures.
- Consumer spending is resilient and investment in equipment has strengthened.
- Economic activity has expanded at a solid pace. The labor market remains solid.
- We're squarely focused on two goals. Four officials pencilled in 25 bps or less of cuts for 2025.
- Policy stance is now significantly less restrictive. The monetary policy is well positioned to deal with risks. We can dial back policy restraint more slowly if inflation not moving sustainably toward 2%. Policymaker projections for the policy rate are higher for next year, consistent with higher inflation.
EURUSD drops to 1.04 after hawkish Powell remarks
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile appQ&A:
- Risks to the labor market have weakened
- Labor market continues to cool, but at a limited and controllable pace
- Inflation is cooling steadily, while it will move above the inflation target in the near term
The hawkish Powell is also causing a strong sell-off on the S&P 500, with the US500 testing the 6000 point area, where the rising trend line is also located.
- The Fed is now closer to a neutral rate, but still the current rate appears to be slightly restrictive
- The expected two cuts next year seem to be a good assessment of the current approach from the Committee
- Current monetary policy appears to be appropriate and according to Powell's 'there's no reason to think a downturn is anymore likely than usual.'
- Core inflation coming down to 2.5% next year, as in projections, would be significant progress.
- It's premature to make any conclusion on impact of tariffs; don't know what countries, what size, how long.
- The committee is discussing ways in which tariffs can drive inflation; we've done a good bit of work on that.
- Higher inflation is probably the biggest factor for the new projections
- We want to see progress on inflation as we think about further cuts, and a solid labor market.
- November inflation is back on track after higher readings.
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
