Politics
not
a
factor
in
rate
decisions,
Powell
emphasizes

Federal
Reserve
Chair
Jerome
Powell
said
regardless
of
the
upcoming
U.S.
presidential
election
this
year,
the
central
bank
continues
to
make
its
interest
rate
decisions
independently

and
that
any
way
otherwise
could
result
in
negative
consequences.

“It’s
hard
enough
to
get
the
economics
right
here,”
Powell
said.
“These
are
difficult
things,
and
if
we
were
to
take
on
a
whole
other
set
of
factors
and
use
that
as
a
new
filter,
it
would
reduce
the
likelihood
we’d
actually
get
the
economics
right.”

The
pending
election
“just
isn’t
part
of
our
thinking,”
Powell
added.
“It’s
not
what
we’re
hired
to
do.”



Hakyung
Kim

Powell
says
he
wants
shrinking
of
balance
sheet
to
be
smooth

Federal
Reserve
Chair
Jerome
Powell
stressed
that
the
move
to
slow
the
pace
of
reducing
its
balance
sheet
is
not
being
done
to
provide
accommodation
to
the
economy
or
be
less
restrictive.

“It
really
is
to
ensure
that
the
process
of
shrinking
the
balance
sheet
down
to
where
we
want
to
get
it
is
a
smooth
one
and
doesn’t
wind
up
with
financial
market
turmoil
the
way
it
did
the
last
time
we
did
this,
and
the
only
other
time
we’ve
ever
done
this,”
he
said.



Michelle
Fox

Powell
downplays
‘stagflation’
concerns

Last
week’s
GDP
report
that
showed
slowing
overall
growth
but
solid
price
increases
raised
some
concern
about
the
U.S.
entering
a
period
of
“stagflation,”
but
Fed
Chair
Jerome
Powell
downplayed
that
idea
on
Wednesday.

“I
don’t
really
understand
where
that’s
coming
from,”
Powell
said.

The
central
bank
chief
pointed
out
that,
by
some
measures,
economic
growth
is
at
3%
and
inflation
is
below
3%.

“I
don’t
see
the
‘stag’
or
the
‘-flation’,”
Powell
added.



Jesse
Pound

Stocks
rally
as
Powell
says
it’s
unlikely
the
next
move
will
be
a
rate
hike

The
major
averages
leapt
sharply
higher
Wednesday
afternoon
after
Federal
Reserve
Chair
Jerome
Powell
said
it
is
unlikely
that
the
next
policy
rate
move
will
be
a
hike.

The
S&P
500
popped
0.8%,
while
the
Nasdaq
Composite
jumped
1%.
The
Dow
added
more
than
450
points,
or
1.2%.



Darla
Mercado

Powell
says
it’s
unlikely
the
next
move
is
a
rate
hike

Federal
Chair
Jerome
Powell
ruled
out
the
possibility
that
the
next
policy
move
at
its
June
meeting
will
be
an
interest
rate
hike.

“I
think
it’s
unlikely
that
the
next
policy
rate
move
will
be
a
hike.
I’d
say
it’s
unlikely,”
Powell
said.

Asked
about
what
it
would
take
to
have
a
rate
increase,
Powell
said,
“I
think
we’d
need
to
see
persuasive
evidence
that
our
policy
stance
is
not
sufficiently
restrictive
to
bring
inflation
sustainably
down
to
2%
over
time.
That’s
not
what
we
think
we’re
seeing.”



Yun
Li

Fed
is
not
gaining
‘greater
confidence’
on
inflation
so
far
this
year,
Powell
says

The
Federal
Reserve’s
recent
statements
have
indicated
that
central
bankers
want
“greater
confidence”
that
inflation
is
falling
toward
2%.
It
is
not
quite
clear
what
exactly
that
would
entail,
but
the
Fed
is
not
there
yet,
according
to
Chair
Jerome
Powell.

“So
far
this
year,
the
data
have
not
given
us
that
greater
confidence,”
Powell
said.

The
Fed
chair
then
said
the
central
bank
was
willing
to
sit
tight
until
the
inflation
situation
changes.

“It
is
likely
that
gaining
such
greater
confidence
will
take
longer
than
previously
expected.
We
are
prepared
to
maintain
the
current
target
federal
funds
rate
for
as
long
as
appropriate,”
Powell
said.



Jesse
Pound

Fed
is
watching
for
labor
market
changes,
Powell
says

Fed
Chair
Jerome
Powell
said
Wednesday
that
the
central
bank
was
keeping
an
eye
on
the
job
market,
which
has
so
far
shown

resiliency

in
the
face
of
monetary
policy
tightening.

“We’re
also
prepared
to
respond
to
an
unexpected
weakening
in
the
labor
market,”
Powell
said.
He
noted
the
central
bank’s

“dual
mandate,”

which
includes
both
stable
prices
and
maximum
employment.



Alex
Harring

JPMorgan’s
David
Kelly
more
confident
rate
cuts
will
begin
this
year

The
Federal
Reserve
gave
a
slightly
dovish
message
when
it
decided
to
cut
the
Treasury
runoff
from
its
balance
sheet
to
$25
billion
from
$60
billion,
said
David
Kelly,
chief
global
strategist
with
JPMorgan
Asset
Management.

It
could
have
just
gone
to
$30
billion,
he
said
on
CNBC’s
“Power
Lunch.”

“The
fact
that
they
went
that
extra
$5
billion,
it
probably
doesn’t
sound
like
a
lot,
but
it
does
say
that
they
are
trying
to
send
a
message
here
that
they
are
not
going
to
be
too
hawkish,”
he
said.
“It
gives
some
more
confidence
they
won’t
hike
again
but
they
will
eventually
cut
rates
this
year.”



Michelle
Fox

Fed’s
‘pro-economy’
decision
should
reassure
investors,
Global
X’s
Scott
Helfstein
says

Rather
than
a
hawkish
pivot,
the
Federal
Reserve’s
move
to
keep
rates
steady
is
a
“pro-economy”
statement
that
could
push
equities
higher,
according
to
Global
X
Senior
Vice
President
and
Investment
Strategy
Head
Scott
Helfstein.

“The
Fed
is
more
concerned
that
inflation
fails
to
fall
in
an
accelerating
economy,
and
that
should
be
reassuring
for
investors,”
Helfstein
said.
“Companies
are
better
able
to
plan,
invest,
and
innovate
when
rates
are
stable.
Markets
like
predictability
and
consistency.”

According
to
Helfstein,
central
bankers
could
be
expecting
a
midcycle
acceleration
rather
than
an
economic
contraction,
considering
that
commodity
prices
are
rallying
and
industrial
and
tech
sector
earnings
are
beating
expectations.
“Corporate
investment
and
consumer
spending
will
probably
drive
the
next
leg
of
economic
expansion,
rather
than
lower
rates,”
he
said.



Pia
Singh

Fed
notes
little
progress
toward
2%
inflation
goal
shows
cuts
not
on
horizon,
Bankrate
analyst
says

The
Fed
noting
a
lack
of
continued
progress
on
batting
down
inflation
early
in
its
statement
should
tell
traders
not
to
hold
their
breath
on
interest
rate
cuts,
according
to
Greg
McBride,
chief
financial
analyst
at
Bankrate.

The
central
bank

said
in
the
first
paragraph
of
its
statement

that
it
has
seen
little
further
movement
toward
an
annual
inflation
rate
of
2%,
which
is
the
preferred
level.
For
McBride,
pointing
to
this
so
early
in
the
release
is
telling.

“Calling
that
out
in
the
first
paragraph
is
tantamount
to
saying
that
interest
rate
cuts
are
not
coming
soon,”
he
said.



Alex
Harring

Powell
says
inflation
is
still
too
high

Fed
Chair
Jerome
Powell
sent
a
warning
about
sticky
price
pressures
at
the
postmeeting
press
conference.

“Inflation
is
still
too
high.
Further
progress
in
bringing
it
down
is
not
assured
and
the
path
forward
is
uncertain,”
he
said.



Yun
Li

Fed
slows
pace
of
balance
sheet
reductions

The
Federal
Reserve
said
Wednesday
that
it
is
going
to
slow
the
pace
it
is
allowing
maturing
bond
proceeds
to
roll
off
the
balance
sheet
without
reinvesting
them.

The
program,
nicknamed
“quantitative
tightening,”
began
in
June
2022
and
has
brought
the
balance
sheet
down
to
$7.4
trillion,
$1.5
trillion
less
than
its
mid-2022
peak.

Starting
in
June,
the
Fed
will
reduce
its
monthly
cap
on
Treasurys
to
$25
billion
from
$60
billion.
As
a
result,
the
annual
reduction
in
holdings
will
be
$300
billion,
compared
to
the
$720
billion
when
the
program
began.



Michelle
Fox,
Jeff
Cox

Focus
now
on
labor
report,
says
Morgan
Stanley’s
Jim
Caron

The
market
is
anticipating
the
Federal
Reserve’s
first
rate
cut
will
come
in
December,
yet
many
forecasters
are
thinking
July,
said
Jim
Caron,
chief
investment
officer
of
the
portfolio
solutions
group
at
Morgan
Stanley
Investment
Management.

For
Caron,
the
answer
will
come
down
to
what
happens
with
the
labor
market.

“The
fly
in
the
ointment
is
going
to
be
the
labor
report.
If
the
labor
market
starts
to
weaken,
I
think
that
advances
the
time
scale
for
the
Fed
to
start
to
cut
earlier,”
Caron
said
on
CNBC’s
Power
Lunch
.
“If
the
labor
market
stays
strong,
I
think
that
they
are
going
to
stay
on
probably
until
December.”



Michelle
Fox

See
what
changed
in
the
new
Fed
statement

The
Fed
released
its
latest
statement
Wednesday
afternoon.
Notably,
the
central
bank
pointed
to
a
lack
of
progress
in
getting
inflation
back
to
the
2%
goal.


Click
here

to
see
what
changed
compared
with
what
was
released
at
the
previous
meeting
in
March.



Alex
Harring

Federal
Reserve
leaves
interest
rates
unchanged

Central
bank
policymakers
held
steady
on
interest
rates
at
the
conclusion
of
their
meeting,
a
move
that
was
widely
expected
by
the
markets.

The
fed
funds
target
rate
remains
at
its
5.25%
to
5.5%
range.

The
Federal
Reserve
called
out
a
“lack
of
further
progress”
in
getting
inflation
down
to
its
2%
target.


Read
more
about
the
Fed’s
latest
decision
from
CNBC’s
Jeff
Cox
.



Darla
Mercado

Markets
before
the
Fed’s
policy
decision
announcement

The
S&P
500
and
the
Nasdaq
Composite
were
each
down
about
0.2%
as
the
Federal
Reserve
prepares
for
its
rate
decision.
The
Dow
Jones
Industrial
Average
was
higher
by
roughly
130
points,
or
0.3%.

The
yield
on
the
2-year
Treasury
was
lower
by
about
3
basis
points
at
5.012%,
while
the
rate
on
the
10-year
Treasury
inched
lower
by
nearly
4
basis
points
to
4.647%.



Darla
Mercado

Don’t
expect
too
many
details
on
the
rate
path
from
Powell,
Russell
Investments’
BeiChen
Lin
says

Federal
Reserve
Chair
Jerome
Powell
likely
will
not
provide
too
many
particulars
on
when
the
first
rate
cut
will
come,
according
to
BeiChen
Lin,
investment
strategist
at
Russell
Investments.

“I
think
Chair
Powell
may
heed
the
‘silence
is
golden’
maxim
at
this
week’s
press
conference
after
its
May
Fed
meeting,”
he
said
in
a
written
statement.
“He’ll
likely
try
to
say
as
little
as
possible
about
when
he
expects
the
first
rate
cut
to
come
in
order
to
preserve
optionality.”

The
strategist
noted
that
while
market
participants
have
been
concerned
about
inflation
being
sticky,
he
noted
that
wage
pressures
“are
likely
to
continue
easing
into
2024
as
the
labor
markets
further
normalize.”

“Since
wages
are
a
key
input
cost
for
many
services
businesses,
a
cooling
in
wage
growth
can
also
help
lower
overall
price
pressures,”
Lin
said,
noting
that
he
thinks
the
likelihood
of
the
Fed
having
to
raise
rates
is
“very,
very
low.”

“Even
with
the
upside
surprise
to
inflation
in
Q1,
we
still
think
the
Fed
will
be
in
a
position
to
cut
interest
rates
this
year,
likely
in
September
and
December,”
the
strategist
said.



Darla
Mercado

Vanguard
sees
a
‘deferred
landing’
and
a
cautious
Fed

The
recent
blast
of
hot
inflation
data
is
making
the
odds
of
a
hoped-for
“soft
landing”
less
likely,
according
to
Vanguard
economists
Joe
Davis
and
Josh
Hirt.

Most
recently,
the

employment
cost
index
,
which
tracks
salaries
and
benefits,
grew
more
than
expected
in
the
first
quarter.
That
reading
comes
after
the
core

personal
consumption
expenditures

price
index
was
hotter
than
economists
anticipated
for
March.

“With
inflation
data
continuing
to
be
surprisingly
hot
for
the
past
quarter,
the
narrative
that
these
surprises
are
all
attributable
to
‘one
offs’
in
individual
components
is
becoming
harder
to
sustain,”
Davis
and
Hirt
said
in
a
written
statement.
They
noted
that
although
the
Fed’s
policy
is
restrictive,
it
is
not
restrictive
enough.

“Time
will
tell
but
the
data
suggest
that
what
we
call
a
‘deferred
landing’
is
more
likely
than
the
long
anticipated
‘soft
landing,'”
they
added.
“Along
with
our
forecast
for
core
inflation
pressures
to
remain
elevated
as
supply
tailwinds
fade,
we
expect
this
to
keep
the
Fed
cautious
on
cutting
rates
this
year.”



Darla
Mercado

What
to
expect
from
the
Federal
Reserve
on
Wednesday

Central
bank
policymakers
are
expected
to
stay
put
on
interest
rates,
keeping
them
at
their
target
range
of
5.25%
to
5.5%.
Indeed,
fed
funds
futures
trading
indicates
a
99%
probability
that
rates
will
hold
steady,
per
the

CME
FedWatch
Tool
.

The
main
event,
however,
will
be
the
policy-setting
Federal
Open
Market
Committee’s
statement
at
the
conclusion
of
this
meeting,
as
well
as
Fed
Chair
Jerome
Powell’s
2:30
p.m.
ET
press
conference.
Traders
will
read
into
Powell’s
comments
to
get
a
sense
of
where
policymakers
stand
on
the
path
for
rates
in
2024.

The
Fed
may
also
share
details
on
its
balance
sheet,
where
it
has
been
rolling
off
maturing
Treasurys
and
mortgage-backed
securities.


Read
more
from
CNBC’s
Jeff
Cox
here

on
what’s
ahead
for
the
Fed.



Darla
Mercado