Latest news from the Fed
Powell says they will hold rates at next meeting, although some additional rate hike is still on the table
20/10/2023
Powell suggests that the Fed will keep rates unchanged at the next meeting, although he leaves the door open to future hikes if the economy shows signs of further growth. Regarding the rally in sovereign bonds, Powell attributes it to the Fed’s readjustment to a better economic outlook, higher deficits and balance sheet reduction. What he makes clear is that it is good for them because it makes it easier for them to transmit monetary policy.
Previous Fed News
Powell’s Semiannual Appearance before the Senate
23/06/2023
Maintains the tone and speech given yesterday in Congress and last week after the Fed meeting. He still has a couple more hikes to go in his fight against inflation that has moderated mainly due to falling energy prices and the normalization of supply chain disruptions, so the cumulative tightening effect of rate hikes is not yet fully felt. The best example is the case of services, where inflationary pressures remain. The purpose of the recent pause in rate hikes is to continue the slowdown in rate hikes to avoid “going too far” and causing a worse than expected impact on the economy. Finally, he expects to keep rates at elevated levels for some time and rules out a start of cuts until they ensure that inflation is heading towards the 2% target. He opens the door to a cut next year depending on how the economy performs.
Powell reinforces the Fed’s commitment to inflation.
22/06/2023
In congressional appearance, Powell kept tone and vagueness in his message.- Congress has focused most of its questions on banking regulation. Meanwhile, Powell focused his message on inflation control, but without specifying the future.
Mixed messages from Fed members
23/05/2023
M. Daly commented yesterday that tightening credit conditions in the banking sector “could amount to a couple of rate hikes.” J. Bullard’s comments supported two more rate hikes in 2023.
Finally, Kashkari commented that whether or not to move rates at the June 13/14 meeting is a “tight decision”. In any case, he believes that no move in June does not mean that the tightening cycle is over.
James Bullard believes that rates should rise to a range of 5% to 7%.
18/11/2022
Bullard and Daly cool rate hike pause scenario. St. Louis Fed President James Bullard states that, in his view, rates should rise to a range of 5% to 7%. San Francisco Fed President Mary Daly states that a pause in rate hikes is not among the Fed’s options at present.