After the FED keeps interest rates steady, FED Chairman Jerome Powell holds an important press conference.
Here are all the highlights from Powell’s live broadcast:
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- The economy is strong.
- The FED made a technical decision to slow down the pace of balance sheet reduction.
- Surveys show increasing economic uncertainty.
- Labor market conditions are solid.
- Inflation is still a bit high.
- Time will tell how the uncertainty will affect the economic outlook.
- The unemployment rate was in a narrow range last year.
- Recent signs suggest consumer spending is slowing.
- Inflation has improved but remains above target.
- Survey shows tariffs drive inflation expectations.
- Some short-term inflation indicators are trending upward.
- There is a high level of uncertainty about new policies and their impact.
- There is no need for the Fed to rush to change its policy stance.
- We must focus on separating signals from noise.
- The new government is implementing significant policy changes, and the key is net impact.
- If the economy remains strong, we can maintain policy restraint for longer.
- If the labor market is weak, we can ease policy if necessary.
- We have seen some signs of increasing tightening in the money market.
- Politics does not follow a predetermined path.
- The framework review currently focuses on labour market dynamics and full employment targets.
However, according to the FED’s dot plot announced with the interest rate decision:
- Among the 19 authorities, 4 authorities said no interest rate cuts would be made in 2025 (1 in December),
- 4 authorities said that the cumulative interest rate cut in 2025 will be 25 basis points, meaning 1 interest rate cut (3 in December),
- 9 officials believe that the cumulative interest rate cut in 2025 should be 50 basis points, meaning 2 interest rate cuts (10 in December),
- 2 officials believe that the cumulative interest rate cut in 2025 should be 75 basis points, i.e. 3 interest rate cuts (3 in December),
- No official believes the cumulative rate cut in 2025 should be 100 basis points (1 in December) and no official believes the cumulative rate cut in 2025 should be 125 basis points (1 in December).
*This is not investment advice.
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