Latest news with #FedOfficials
Wall Street Journal
09-07-2025
- Business
- Wall Street Journal
A Hazy Inflation Outlook Divides the Fed
A majority of Federal Reserve officials at their meeting last month expected they would be able to resume interest rate cuts this year, but only two of them voiced support for a rate cut as soon as the central bank's next gathering later this month. Minutes of the June 17-18 policy meeting pulled back the curtain on an emerging split inside the central bank's rate-setting committee. The release of the internal discussion coincides with White House pressure on Fed Chairman Jerome Powell to cut rates.
Wall Street Journal
03-07-2025
- Business
- Wall Street Journal
June Jobs Report Likely to Extend Fed's Summer Pause
The June jobs report is likely to keep Federal Reserve officials in their wait-and-see stance for the summer as they anxiously observe how significant trade and immigration policy changes influence pricing and job-staffing decisions by American businesses. Most Fed officials haven't made much of an effort to build the case for rate cuts at their next meeting, July 29-30, even though two officials have said they are open to lowering rates.
CNA
01-07-2025
- Business
- CNA
Powell reiterates US Fed will wait for more data before cutting rates
SINTRA: US Federal Reserve Chair Jerome Powell on Tuesday (July 1) reiterated the US central bank's plans to "wait and learn more" about the impact of tariffs on inflation before lowering interest rates, again setting aside President Donald Trump's demands for immediate and deep rate cuts. "We're simply taking some time," Powell said at a central bank gathering in Portugal a day after Trump sent him a handwritten missive noting how low other central banks had cut rates and suggesting the US needed to move. "As long as the US economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be." Yet Powell also declined to rule out a possible rate cut at the Fed's upcoming July 29-30 meeting, prompting investors to slightly boost the possibility of a reduction at that session and shifting focus to a jobs report to be issued on Thursday and new inflation data coming in two weeks, both covering the month of June. Powell noted that a majority of Fed officials in recent projections do expect to lower the benchmark interest rate later this year, and are closely attuned to whether inflation increases this summer, as policymakers and many economists expect. "It's going to depend on the are going meeting by meeting," Powell said. "I wouldn't take any meeting off the table or put it directly on the table. It's going to depend on how the data evolve.' The Fed is facing a complicated moment, weighing sometimes conflicting data that could leave officials faced with both rising unemployment and rising inflation, the worst of both worlds for a central bank tasked with maintaining both stable prices and maximum employment. Uncertainty over trade and other administration policies has left businesses also unsure of what to do, and the Fed's decision-making has been under virtually daily assault from a president eager to install his chair when Powell leaves the Fed's top job next May. At the Sintra gathering, an annual forum sponsored by the European Central Bank and akin to the Fed's yearly gathering at Jackson Hole, Wyoming, Powell got at least a momentary reprieve. FED IS FOCUSED "100%" ON INFLATION AND JOBS TARGET Asked about Trump's barrage of insults, Powell's comment that the Fed was focused "100%" on its inflation and jobs target drew applause from the audience and from the heads of the ECB, the Bank of England and other central banks who joined him onstage for a panel discussion. Central bank independence from the lobbying of elected officials, at least in the setting of interest rates, is considered key to keeping inflation under control. Powell said his message to whomever Trump chooses to succeed him in a little over 10 months would be "we're trying to deliver macro stability, financial stability, economic stability for the benefit of all the people. If we're going to do that successfully, we need to do it in a completely non-political way, which means we don't take sides. We don't play one side against the other." It remains unclear how long the Fed may have to wait to gain the clarity it needs to resume reducing interest rates. The central bank cut steadily last year, beginning in September - something Trump alleges was politically motivated - but stopped in December after lowering the benchmark rate a full percentage point to the current 4.25% to 4.5% range. Powell has made no secret of why. "In effect, we went on hold when we saw the size of the essentially all inflation forecasts for the United States went up materially as a consequence," Powell said. The central bank targets inflation of 2%, and recent readings remain above that level now for the fourth year running following a spike in prices during the COVID-19 pandemic. While officials are open to lowering rates if inflation proves lower than expected or the job market weakens, Powell said there is nothing in the data so far indicating a need to move fast or soon.
The National
01-07-2025
- Business
- The National
Jerome Powell maintains wait-and-see policy as Trump ramps up pressure for rate cuts
Federal Reserve chairman Jerome Powell on Tuesday repeated his wait-and-see approach towards cutting US interest rates despite mounting pressure from US President Donald Trump. 'As long as the US economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be,' Mr Powell said during a panel discussion at a European Central Bank forum in Portugal. 'We're simply taking some time,' he told delegates. The Fed last month held its target range for interest rates between 4.25 and 4.50 per cent – the fourth consecutive time it has left rates unchanged. When asked if July's meeting was too soon for a rate cut, Mr Powell said the Fed is going 'meeting by meeting'. 'I wouldn't take any meeting off the table or put it directly on the table. It's going to depend on how the data evolve.' Two Fed officials have indicated a willingness to cut rates in July because they believe tariffs will have a one-time inflationary impact, while others have backed Mr Powell's cautious approach. Projections from the Fed's June meeting showed a majority of officials expect to cut rates twice this year. The Fed has maintained a cautious approach towards setting rates since Mr Trump's inauguration, with the president's shifting tariff policy causing economic uncertainty. And Mr Powell said the Fed could have cut rates more by now were it not for tariffs, in a similar message he said during congressional testimony last week. 'In effect, we went on hold when we saw the size of the tariffs, and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,' he said. Most economists argue tariffs will lead to higher inflation and slower growth, although data in recent months was mixed. A Commerce Department report last week showed the inflation picture has changed little, with the Fed's preferred metric rising by 2.3 per cent annually. Core inflation, which strips food and energy, came in higher than expected at 2.7 per cent. But signs of tariff-related pressures are beginning to appear. Meanwhile, an ISM survey on manufacturing on Tuesday showed manufacturing remained sluggish last month, although at a more modest pace. 'But worries about tariffs continue to crimp supply, leaving manufacturers fraught with trade-offs for holding inventory as pricing pressure builds,' Wells Fargo economists Shannon Grein and Tim Quinlan wrote in a note to clients. Mr Powell on Tuesday said he expects to see higher inflation readings in the coming months, repeating a similar warning he has cautioned in recent weeks His comments come a day after Mr Trump further escalated his attacks. On Monday, he sent a note to the Fed chairman written over a list of countries' interest rates. 'Jerome – You are, as usual, 'Too Late'. You have cost the USA a fortune – and continue to do – you should lower the rate – by a lot!,' the note read. On the same missive, Mr Trump said US interest rates should be between 0.50 per cent and 1.75 per cent. Mr Trump has said he wants the Fed to lower rates to help service US debt. Mr Powell has so far deflected the pressure coming from the White House. 'I'm very focused on just doing my job,' he said when asked if Mr Trump's attacks make his job more difficult. 'The things that matter are using our tools to achieve the goals that Congress has given us: maximum employment, price stability, financial stability. That's what we focus on – one hundred per cent,' he said. Separate data released on Tuesday showed US job openings unexpectedly rose to a six-month high in May, but a decline in hiring showed there were some signs of a slowing labour market. Still, that is unlikely 'to shake the Federal Reserve out of its wait-and-see mode', Oxford Economics lead economist Nancy Vanden Houten said.
Yahoo
26-06-2025
- Business
- Yahoo
Fed Officials Could Be Split On Whether To Cut Interest Rates In July
At least two Fed officials spoke out in favor of lowering borrowing costs as soon as July, while several others said the Fed should hold interest rates steady for now. Lower borrowing costs could boost the economy but may set back the Fed's efforts to reduce inflation to a 2% annual rate. Financial markets are betting the "patient" faction led by Fed Chair Jerome Powell will prevail at least for now, assigning a 22% chance of a Fed rate cut in July. President Donald Trump has repeatedly demanded the central bank cut the fed funds rate, igniting a debate over whether the Fed, an independent body, should answer to the cut, or not to cut? That question could divide Federal Reserve policymakers, who are seemingly split on whether the central bank should lower borrowing costs when it next meets in July. At least three Federal Reserve policymakers spoke out this week in favor of holding interest rates steady for the time being, in contrast to two who said they were open to the idea of cutting rates soon, as President Donald Trump has demanded. The comments suggested a growing split among members of the committee that votes to set the central bank's monetary policy. The "wait-and-see" faction is led by Fed Chair Jerome Powell. Powell has argued that the central bank should continue to hold its key federal funds rate at a higher-than-usual level, as it has done all year, out of concern that Trump's tariffs could push up inflation. The other side, including governors Christopher Waller and Michelle Bowman, has said a rate cut is in order since price increases have been mild in the last four months. The fed funds rate influences interest rates on all kinds of loans. Lowering the rate could boost the economy by encouraging borrowing and spending. It could also help the federal budget by reducing the amount of interest the government pays on the national debt. In recent weeks, Trump has repeatedly demanded that the Fed lower rates dramatically. Powell and other inflation "hawks " view lowering rates as risky. Trump's movement to impose tariffs on U.S. trading partners is costing importers billions, and some of those costs will be passed along to consumers sooner or later. That could set off a cycle of price hikes, which would be a setback in the Fed's mission to get inflation down to a 2% annual laid out that argument last week in a press conference following the Fed's policy decision meeting, and again Tuesday and Wednesday in testimony before Congress. The Federal Open Market Committee voted unanimously to hold rates steady last week, but the latest round of comments by Fed speakers raised questions about whether that unanimity would hold in Wednesday and Thursday, two officials, Thomas Barkin, president of the Richmond Fed, and Beth Hammack, president of the Cleveland Fed, reiterated Powell's viewpoint."There is little upside in heading too quickly in any one direction,' Barkin said Thursday in prepared remarks for an event hosted by the New York Association for Business Economics, Bloomberg reported. 'Given the strength in today's economy, we have time to track developments patiently and allow the visibility to improve.'Hammack said the uncertainty about the economy made the wait-and-see approach sensible. Forecasts have been clouded by major unknowns that will affect the economy's trajectory, such as where Trump will finally set import taxes on U.S. trading partners and what effect the duties will have on the economy. "When clarity is hard to come by, waiting for additional data will help inform the path ahead," she said Thursday at a conference in London, according to prepared remarks. "It may well be the case that policy remains on hold for quite some time before the committee initiates very modest cuts to return policy to a neutral setting." But high inflation isn't the only risk facing the economy. Forecasters expect the tariffs to drag down the economy and hurt the job market in the coming months. The Fed is tasked with keeping employment high and inflation low. According to prepared remarks, Bowman said Monday at a research conference in Prague that weakness in the job market would put pressure on the Fed to cut rates."Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market," she Fed should cut rates "as early as July," Waller said in an interview on CNBC last is on the short list of candidates that Trump is considering to take Powell's place when his term ends next year, according to a report by the Wall Street Journal. Trump is reportedly considering naming the next Fed chief as early as September, in a bid to put more pressure on the central bank to cut rates. Despite the president making appointments to the committee, the Fed is independent of direct control of the White of Thursday, financial markets were betting patience would prevail, at least for the time being. Investors were pricing in a 23% chance the Fed would reduce the fed funds rate in July, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data. Read the original article on Investopedia
