After the FED announced that it left interest rates constant, Jerome Powell started his very important press conference at 21:30 Turkey time (UTC+3).
Here are all the details from Powell's speech:
- Inflation has decreased significantly but is still very high.
- The FED generally expects GDP to slow down from last year's pace.
- We maintain our restrictive policy stance.
- The employment growth rate is still strong but slower than in the first quarter.
- The unemployment rate remains low.
- Inflation has decreased significantly.
- The strong immigration rate increased labor force participation.
- Our economy has made significant progress.
- The risks to accomplishing the dual mission are in better balance.
- We need to see more good data to support confidence about inflation.
- We will continue to be extremely careful against inflation risks.
- FED forecasts are not a plan, they may change.
- If the economy remains solid and inflation continues, we will continue to keep interest rates where they are for as long as necessary.
- If employment weakens unexpectedly, the Fed is ready to respond.
- Overall, the broad set of indicators on the labor market suggest that the market is relatively tight but not overheated.
- So far this year, we don't have any more confidence in inflation to cut rates.
- We will continue to make decisions meeting by meeting.
- We assume inflation numbers are good but not great.
- If you have inflation of 2.6 or 2.7%, that's a good point.
- We're making a pretty conservative forecast on inflation, so if we get better numbers, I think we'll see the forecasts come down.
- We welcome today's inflation figures and hope for more.
- We need more confidence that inflation will fall back to 2%.
- Our confidence in the forecasts is not high.
- We remain slightly conservative in our inflation outlook.
- I won't be specific about how many good inflation numbers will be needed to cut interest rates.
- We do not have the confidence to relax the policy at this time.
- We were informed about the first CPI data this morning.
- We will watch the labor market for signs of weakness, but we're not seeing that right now.
- We experienced a pause in the progress of inflation in the first quarter, and we concluded that it would take longer to cut interest rates.
- Due to the slow progress in inflation, interest rate cuts were postponed to a later date.
- A better inflation report than almost everyone expected was announced today.
- The long-term neutral interest rate is theoretical.
- People think it is less likely that interest rates will fall to pre-pandemic levels.
- The policy is restrictive.
- The neutral interest rate question is a question everyone asks.
- The evidence is quite clear that the policy is currently restrictive and is having the impact we would hope for.
- We think our policy stance is correct.
- We are ready to change our policy as appropriate.
- We think the policy is restrictive and eventually the economy will weaken.
- No one foresees an interest rate increase as a base scenario.
- The banking system is sound, strong and well capitalized.
- Inflationary pressures have decreased, but inflation in non-housing services remains high.
- There is a surprising increase in import prices of goods.
- Wages are still above sustainable levels.
- However, overall inflationary pressures have decreased.
- Wages are not the main cause of inflation, but wages must fall for overall inflation to return to 2%.
- Not only the first interest rate reduction, but the entire interest rate process is important.
- Data like today's CPI is a step in the right direction.
- But a data is just a data, we don't want to focus too much on this data.
FED officials' common forecast for interest rates means only a quarter-point cut by the end of 2024.
This is an important change. That's two reductions less than the median estimate in the quarterly Summary of Economic Forecasts released in March. Before the rate decision was announced, interest rate futures markets were pricing in the possibility of up to two cuts this year from the current target range for the federal funds rate of 5.25% to 5.5%.
*This is not investment advice.