The two words from Jerome Powell that rocked the financial markets
Let me be clear: What I said was it’s not the beginning of a long series of rate cuts,” Powell said. “I didn’t say it’s just one or anything like that. When you think about rate-cutting cycles, they go on for a long time and the committee’s not seeing that. Not seeing us in that place. You would do that if you saw real economic weakness and you thought that the federal funds rate needed to be cut a lot. That’s not what we’re seeing.”
Ward McCarthy, Jefferies chief financial economist, said Powell did not make a strong case for the cut where he described once “boiling” trade issues as now “simmering.” The cut was also met by two dissenters, from Boston Fed President Eric Rosengren and Kansas City Fed President Esther George.
Stocks cratered, the dollar hit a more than two-year high and bond yields ripped higher after Fed Chairman Jerome Powell suggested that policymakers were not embarking on a new cycle of rate cutting, after it trimmed the fed funds rate by a quarter point Wednesday.
Markets have been on tenterhooks, once expecting three rate hikes this year, and then an easy Fed policy stance, even as the economy has been showing signs of improvement. But the Fed has been facing the unusual task of explaining why it was cutting rates in the face of stronger economic data.
Traders said there was disappointment with the Fed’s statement, which was perceived more as neutral than dovish, but when Powell later said during a press briefing that the Fed’s action was a “midcycle adjustment to policy” that sent markets reeling.
https://www.msn.com/en-us/money/markets/the-two-words-from-jerome-powell-that-rocked-the-financial-markets/ar-AAF8uyA?li=BBnbfcN
Oops.
= new reply since forum marked as read
