Jerome Powell starts press conference after Fed decision! 🗽 US100 gains 1%

Fed chair, Powell (6:30 PM, BST)

• The full effects of tightening is yet to be felt and Fed policy is now restrictive bur there's a long way to go to get inflation to 2%.

• The labor market remains tight but supply and demand conditions for labor continue to come into better balance.
• Nominal wage growth has shown some signs of easing.
• Labor demand still exceeds supply and economy growth in Q3 was very strong
• Inflation has moderated since middle of last year.  A few months of good inflation data is only the beginning of what it will take.
• Fed is committed to achieving a sufficiently restrictive stance and current Fed policy is putting downward pressure on inflation.

After quite dovish Powell speech US100 surges more than 1% in first reaction to press conference.

Press questions part

Fed have come very far with this rate-hike cycle and is close to end of the cycle

• We are not confident policy is sufficiently restrictive but fFinancial conditions have clearly tightened.
• Fed is still focused on current policy level and is not sure is it restrictive enough, there are no any talks about rate cuts for now
• Fed can hike rates even after longer pause. The question we are asking is, should we hike more?
• Demand in economy is cooling off due to higher interest rates level  but Powell doesn't see recession on the horizon
• Tighter financial conditions from higher long term rates, stronger dollar and lower stocks levels could also matter for future rate conditions.       
• GDP has been strong but forecast to slow. Inflation has been coming down but is still well above target.    
• In determining if we need more firming, we will take into account cumulative tightening, lags and economic and financial developments.
• Fed is attentive to recent data showing resilence of economic data and demand for labor. These could put further progress on inflation at risk and it could warrant further interest rate hikes.
• A government shutdown is a potential source of risk and Fed is monitoring geopolitics for economic implications.
• Probably we will need to see slower growth period and weaker job market to see final financial stability. We are seeing effects of 2022 rate hikes now.
• Fed expectes US economy growth below potential but not huge slowdown or recession
• Federal reserve is carefully for now becasue policy is restrictive and inflation is cooling off
• Fed doesn't consider slowing pace of quantitive tightening (QT). At the same time QT may be playing a relatively small role in rise in longer-term rates.
• It's clear that inflation expectations are in a good place but Fed can't fail fightinng inflation
• Wage increases have really come down significantly over the last 18 months. Risks of doing too much are more balanced now

Source:xStation5