Breaking News:
The Fed delivered on market expectations by announcing its decision to maintain the current range of 5-5.25% for the federal funds rate, following their June policy meeting.
This decision means no changes for those keeping an eye on the economy and interest rate fluctuations.
Powell Speech: Key Takeaways
Federal Reserve Chairman Jerome Powell shares insight on the policy outlook following the decision to maintain the policy rate at 5-5.25%.
Powell emphasizes a more moderate approach to rate hikes and states that they will closely monitor inflation before making any changes. The Fed is also taking into account the effects of credit tightening on the banking industry.
Powell highlights the goal of getting inflation down to 2% while minimizing damage to the economy. He notes the importance of wage growth in achieving this goal and assures transparency in their decision-making process.
Additionally, Powell predicts an upturn in the housing market, but does not anticipate it to solely impact the rates picture.
The upcoming July meeting is touted as a “live” event, confirming a continued focus on getting the policy right.
PPI Updates
US producer prices fall beyond expectations, raising concerns for the Federal Reserve.
In May, PPI plunged by 0.3% month-on-month, compared to the predicted 0.1%, with a modest annual increase of 1.1% after a sharp fall from 2.3% a month earlier.
Although the core CPI appears to be in line with inflation figures, the PPI indicates a desirable trend returning, with monthly price growth staying within the Central Bank target.
Excluding food and energy, the core PPI shows an addition of 0.2% month-on-month and 2.8% annual rate, which was predicted to be at 2.9%.
Had the labor market not been strong and consumer demands on the rise, producer price development would have been regarded as a leading indicator for the CPI.
But with a saturated market, retailers use it to endorse their margins and justify increased interest expenses.
The equilibrium between opposing factors can lead to a continuous downward trend in inflation, prolonging the Federal Reserve’s goal of reaching the 2% target.
Federal Reserve to Delay Interest-Rate Hikes? Markets Seem to Think So
As decision day for the Federal Reserve dawns upon us, the markets are buzzing with anticipation. Will we see a continuation of the interest-rate hiking campaign or a temporary halt?
As of now, the S&P 500 remains steady, while the Dow Jones Industrial Average has seen a slight dip.
Stay tuned for Federal Reserve Chairman Jerome Powell’s press conference later today, which is sure to set the tone for the rest of the day’s market action.
If the central bank does indeed take a break from hiking rates, investor focus will shift to post-meeting commentary from Fed Chair Jerome Powell, and updates to the Fed’s ‘Dot Plot’ to determine whether a hike is likely in July.
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