Following the FED’s announcement of its interest rate decision, Chairman Jerome Powell holds a live press conference.
Here are all the current highlights from Powell’s speech:
- The unemployment rate remained low but increased.
- Inflation has risen recently and remains at slightly elevated levels.
- Job growth has slowed and downside risks to employment have increased.
- Economic growth has slowed.
- The unemployment rate has not changed much compared to last year.
- The slowdown in GDP growth mainly reflects a slowdown in consumer spending.
- Employment growth has slowed significantly due to reduced immigration and falling labor force participation.
- Employment growth appears to be below breakeven.
- The labor market is not as active as before and is somewhat weak.
- Commodity inflation has accelerated and services inflation continues to decline.
- After next year, most indicators of inflation expectations are aligned with the 2% target.
- The overall impact of customs duties on inflation is not yet clear. The baseline scenario is that the impact of customs duties on inflation will be short-lived. The risk of persistent inflation must be managed.
- Inflation risks tend to be on the upside.
- We have the ability to intervene in time.
- Politics is not on a fixed course.
- The change in risks suggests that today’s interest rate cut is appropriate.
- We are firmly committed to the independence of the FED.
- The Committee continues to consistently pursue its dual mandate objectives. Some tariffs do indeed impact the labor market.
- Price increases due to customs duties are expected to continue this year and next year.
- Revised employment data suggest that the labor market is no longer robust.
- There is no broad support for a 50 basis point rate cut today.
- We can think of today’s discount as a risk management discount.
- The landscape of labor market risks has changed significantly since the last Fed meeting.
- The labor market is cooling, which means this needs to be taken into account in policymaking.
- Wage data is just one factor suggesting the labor market is cooling.
- We must continue to work to regain 2% inflation.
- The risk of inflation rising is lower than in April.
- In their Summary of Economic Forecasts, policymakers outlined an interest rate roadmap that aims to reduce inflation to 2% over time.
- Inflation is expected to rise this year due to higher commodity prices as a result of customs duties, but this is expected to be a one-time increase.
- There is less evidence that inflation will rise sustainably.
- If layoffs begin to occur, the unemployment rate could rise quickly because hiring rates are lower.
- The Fed makes decisions on a meeting-by-meeting basis. We will focus on the data. The Fed will not debate forecasts or attempt to reach consensus.
- Under current circumstances, it is normal for there to be major differences of opinion.
- It would be inappropriate to comment on Fed Member Cook’s case.
- I don’t think a 25 basis point interest rate cut will have a significant impact. The entire trajectory of interest rates and expectations should be taken into account.
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After nine months, the Fed lowered its policy rate by 25 basis points to a range of 4%-4.25%. This was the first rate cut since late 2024, and economists expect at least one more cut to follow this year.
The Federal Reserve (FEDER) typically raises or holds interest rates steady to curb inflation and cuts them to support economic growth. However, after long treading cautiously due to inflation concerns, the institution recently took the step of cutting rates following weak employment data.
Fed Chairman Jerome Powell acknowledged that tariffs are starting to affect consumer prices, but said this would be a one-time price impact rather than creating lasting inflationary pressure.
At the meeting, newly appointed Fed member Stephen Miran opposed the decision, stating that he favored a more aggressive 50 basis point cut. Miran was attending the meeting for the first time as President Donald Trump’s nominee, who was narrowly confirmed on September 15th.
Meanwhile, Fed member Lisa Cook, whom Trump attempted to dismiss, also attended the meeting after receiving permission from the appeals court to continue her duties.
*This is not investment advice.