Market Rebellion co-founder Pete Najarian talks about the Fed’s slow rate cut, inflation, and the US market.
A series of better-than-expected inflation figures since the start of the year have made it less likely that the central government will cut interest rates immediately. federal reserve.
of consumer price indexprices, a broad measure of the price of daily necessities including gasoline, food and rent, rose sharply for the third straight month in March, spooking investors and triggering a broad market sell-off.
Fed Chair Jerome Powell warned that a sustained rise in inflation will likely force policymakers to delay interest rate cuts until later this year.
“Recent figures show solid growth and continued strength in the labor market, but so far this year there has been no further progress towards returning to the 2% inflation target,” he said in a panel discussion on Tuesday. It also shows that it cannot be done.”
Fed Chairman Jerome Powell says this year’s inflation data shows ‘lack of progress’
Pedestrians near the U.S. Treasury Building on Friday, December 30, 2022, in Washington, DC, USA. (Photographer: Ting Sheng/Bloomberg via Getty Images/Getty Images)
Surprisingly strong inflation data and hawkish comments from Chairman Powell have all but eliminated the possibility of a rate cut in May. The likelihood of a June rate cut was further lowered to 18.8%, according to the FedWatch tool, which tracks CME Group trading.
Policymakers have significantly raised interest rates in 2022 and 2023 to their highest levels since the 1980s, slow down the economy And cool inflation. Fed officials are now wondering when to take their foot off the brake.
Powell said on Tuesday that policymakers would “maintain current levels of restrictions for as long as necessary” until price pressures are contained, opening the door to a longer-term upward stance.
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“Recent data clearly does not give us much confidence and instead indicates that it will likely take longer than expected to achieve that confidence,” he said. “Having said that, we believe the policies are in place to address the risks we face.”
Federal Reserve Chairman Jerome Powell speaks during a press conference after the Federal Open Market Committee held at the Federal Reserve Board in Washington, DC on September 20, 2023. ((Photo Credit: Chip Somodevilla/Getty Images) / Getty Images)
The Federal Open Market Committee in March voted to keep interest rates unchanged at 5.25% to 5.5%, the highest level in 22 years. Officials also indicated that three rate cuts this year remain likely, but reiterated that the timing of the cuts would depend on the trajectory of inflation.
Officials plan to hold their next meeting from April 31st to May 1st.
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Most investors currently expect the Fed to begin cutting rates in September, bringing the total to just two cuts this year, but expect six cuts as early as March. This has been a dramatic change since the beginning of the year.
“Fed Chairman Powell is essentially emphasizing that the downward trajectory of inflation is essentially stalled and has steered the Fed in a more resolutely hawkish direction,” said Quincy Crosby, chief global strategist at LPL Financial. I cut it,” he said. “Furthermore, he made it clear that there was no ambiguous stance on the rate easing schedule, and that the narrative of “longer rises” remains in place.”
