Fed Chair Jerome Powell indicated on Wednesday that the Fed is likely to cut rates at some point this year, although he acknowledged that the outlook is uncertain and that decisions will be made on a meeting-by-meeting basis.
Powell refrained from specifying the timing of rate cuts. “The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving towards 2%,” he said. The chairman reiterated the Fed will make decisions meeting by meeting, and the board didn’t make any decisions about future meetings at the March meeting.
Addressing concerns about recent inflation data, Powell attributed the spikes partly to seasonal adjustments and underscored the Fed’s vigilance without conceding to inflation complacency fears.
“The February number was high, but not terribly high,” he added.
Powell emphasized that significant deterioration in economic indicators, particularly in the labor market, could prompt the Fed to initiate rate reductions.
Responding to inquiries about the upward revision of the longer-term interest rate projection, Powell cited lingering uncertainties but expressed confidence that rates would not regress to pre-pandemic levels.
Regarding the balance sheet, Powell hinted at ongoing discussions about slowing the pace of asset holdings decline, suggesting a potential commencement of runoff in the near future.
What a pump by JP at FOMC 🚀
⚠️ Trading tips: Looking for any dips to catch the calls as the chart shows an overbought situation. Avoid FOMO chase and wait to trade the trend later. Stay nimble and be patient. Trade safe! 😉
The S&P 500 index rose past 5,200 points during Powell press conference, reaching fresh all-time highs. The SPDR S&P 500 ETF Trust (NYSE:SPY) was 0.9% higher at 03:21 p.m. ET.
Tech-heavy Nasdaq 100, as tracked by the Invesco QQQ Trust (NASDAQ:QQQ) rose 1%.
Treasury yields were flat across the board, with the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) unchanged for the day.
Gold rallied 1.2%, with the precious metal breaking above $2,180/oz. The SPDR Gold Trust (NYSE:GLD) rose 1.1%.
Buy call during JP's interview
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