Powell says consumers are feeling the impact of rising prices, not rising inflation
Powell believes that consumers are feeling the impact of high prices, not high inflation.
“We know very well that prices have gone up a lot and people are really feeling that, it’s the price of food, transport, home heating, things like that. So there’s been a huge amount of pain from this global burst of inflation,” he said. “Inflation itself has come down significantly now, but people are still feeling high prices, and that’s what people are really feeling.”
Powell added that the best solution to this is for the Fed to continue working to bring inflation down to target levels so wages can catch up and ultimately restore consumer sentiment toward the economy.
—Lisa Kelley Han
Powell says Fed won’t ‘seek legal changes’ to own Bitcoin
Federal Reserve Chairman Powell said the central bank does not plan to add Bitcoin to its balance sheet.
“We are not allowed to own Bitcoin. The Federal Reserve Act dictates what we can own, and we are not seeking to change the law. That is something for Congress to consider, but we are not seeking to change the law.” Federal Reserve Law Change,” Powell said.
President-elect Donald Trump embraced the crypto industry during his campaign and toyed with the idea of building a strategic reserve of Bitcoin.
— Jesse Pond
Powell says labor market is cooling but not a cause for concern
Powell said the Fed is paying close attention to the labor market.
“In many ways, we do think the labor market is still cooling,” he said, before warning: “It’s not cooling very quickly or to a degree that is a real cause for concern.”
—Lisa Kelley Han
Fed will look for progress on inflation before cutting rates further
The Fed will seek further progress on inflation in 2025, given the stickiness in year-over-year data that worries policymakers.
“As we consider further rate cuts, we will be watching developments on the inflation front,” Powell said, noting that “we have been moving sideways on the 12-month inflation front.”
—Sarah Min
Powell says some FOMC members are taking ‘preliminary’ steps to predict Trump’s policies
Powell said some FOMC members are beginning to assess the potential impact of President-elect Trump’s policy proposals.
“Some did take a very preliminary step to start incorporating highly conditional estimates of the economic impact of the policy into their forecasts at this meeting and saying so at the meeting. Some said they didn’t do that. , some people don’t do this.
“So we have people taking a bunch of different approaches to this. But some do see policy uncertainty as one of the reasons why they’re reducing inflation uncertainty,” he continued.
The Fed chairman later discussed the tariff proposals in detail, saying it was too early to give “a clear answer” on how they would affect inflation.
— Jesse Pond
Powell says next year’s Fed rate cuts won’t depend on today’s results
On Wednesday, Federal Reserve Chairman Jerome Powell said any interest rate cuts implemented by the U.S. central bank in 2025 would be based on upcoming data, not current results.
“I don’t think our actual cuts next year will be because of anything we write down today. We will react to the data; it’s just a general sense that the committee thinks might be appropriate,” he said when asked Cut interest rates by two percentage points It is expected to decrease by 4 times by 2025, which is lower than the previous forecast.
Powell added: “But as for further cuts, we will look for further progress on inflation and continued strength in the labor market. As long as the economy and the labor market are solid, we can remain cautious as we consider further cuts.”
—Lisa Kelley Han
Powell calls Wednesday’s rate cut a ‘close call’ but ‘right decision’
Federal Reserve Chairman Jerome Powell called Wednesday’s decision to cut interest rates a “close call” but ultimately the right decision for the central bank as it seeks to fulfill its dual mission.
“I would say today was a close call, but we think it’s the right decision because we think it’s the best decision to advance our goals, maximize employment and price development,” Powell said at a press conference.
Powell said that acting too slowly and unnecessarily could harm economic activity in the labor market, while acting too quickly and unnecessarily could undermine the progress the Fed has made on inflation, so the central bank is working hard to avoid both risks.
— Yun Li
Powell says Fed may be ‘cautious’ in cutting interest rates from now on
Federal Reserve Chairman Jerome Powell said the bar for further rate cuts by the central bank could be higher after Wednesday’s action.
“With today’s actions, we have lowered the policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive. As a result, we can be more cautious when considering further adjustments to the policy rate,” Powell said.
— Jesse Pond
J.P. Morgan’s chief global strategist says the Fed has ‘placed its bet’
JPMorgan chief global strategist David Kelly wasn’t surprised by the Fed’s new, lower protective measures. Two interest rate cuts in 2025. He believes the central bank is laying the groundwork for more cautious monetary easing next year.
“Right now, there’s some level of calm among the administration,” Kelly told CNBC. “I think at some stage there’s going to be some pressure on them to be more lenient.”Power lunch”.
He added: “They are trying to lay the groundwork and say ‘this is what you should expect from us’ so that they can try to avoid or delay any fight with the government next year or in 2026.”
— Michelle Fox
Cleveland Fed’s Hammack disagrees with rate cut decision
The Federal Open Market Committee’s decision to lower the benchmark interest rate was not unanimous.
Cleveland Fed President Beth Hammack voted against the move, preferring to keep interest rates steady, the new policy statement said. The Federal Open Market Committee also raised objections at its September meeting, when Fed Governor Michelle Bowman wanted a smaller rate cut.
It was only the third FOMC meeting for Hammack, who took over as Cleveland Fed president in August after Loretta Mester retired.
— Jesse Pond
Disappointing Fed forecasts drag stocks lower
On Wednesday, December 18, 2024, in New York, the United States, a TV station broadcast live the Federal Reserve’s interest rate cut on the floor of the New York Stock Exchange (NYSE).
Michael Nagel | Bloomberg | Getty Images
Stocks plunged and turned negative on Wednesday after the Federal Reserve signaled smaller interest rate cuts in 2025.
The S&P 500 was last down nearly 0.4%, and the Nasdaq was down about 0.4%. The Dow Jones Industrial Average fell about 100 points and was heading for its tenth consecutive session of losses.
—Dara Mercado
The Fed will cut interest rates by a quarter of a percentage point
The Federal Reserve cut its key interest rate by a quarter of a percentage point, a move widely expected by traders.
This rate cut lowers the Fed’s target interest rate range to 4.25% to 4.5%.
Investors will look to the central bank’s summary of economic forecasts for clues and listen to Federal Reserve Chairman Jerome Powell’s press conference at 2:30 p.m. ET.
Read more on the Fed’s rate decision as CNBC’s Jeff Cox reports.
—Dara Mercado
Where the market was before the Fed’s decision
UBS said it expects the pace of interest rate cuts by the Federal Reserve to slow down in 2025 and that the market will also experience volatility in the near future.
Federal Reserve Chairman Powell attends a press conference after the two-day Federal Open Market Committee interest rate policy meeting in Washington, the United States, on November 7, 2024.
Annabel Gordon | Reuters
UBS said the Federal Reserve may cut interest rates by a quarter of a percentage point on Wednesday, its third consecutive rate cut, but investors should not expect the Fed to maintain the same pace next year.
“Overall, we believe investors should expect a slower pace of rate cuts in 2025 as markets recalibrate the Fed’s stance,” Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, wrote in a note on Wednesday. It will slow down and volatility will appear in the near future.
She said there is a silver lining to the short-term market turmoil, as investors who are under-allocated to stocks can snap up shares.
Investors should also allocate excess cash they hold into high-quality and diversified fixed-income and equity-income strategies, she added.
“These can provide income generation and portfolio diversification, as lower interest rates could erode cash returns next year,” Maselli said.
—Dara Mercado
Lending rates remain high despite Fed rate cuts
The Fed has cut interest rates by three-quarters since its September meeting, but borrowers have yet to see significant savings.
According to MND, the 30-year fixed mortgage rate was 6.95% for the week ended December 13. The rate is higher than the 4.29% rate for the week of March 11, 2022, and also higher than the 6.12% rate for the week of September 13, 2024. rising.
Credit card interest rates haven’t changed much since the Fed started cutting interest rates. As of last week, it was 20.35%, according to Bankrate. This is down from 20.78% in September, but up from 16.34% in March 2022.
However, savings yields have cooled over the past three months. Harvard said the annual yield on five-year CDs was 2.86% for the week ended Dec. 13. This is a slight decrease from 2.87% in mid-September, but a significant increase from 0.50% in March 2022.
—Darla Mercado, Nick Wells
At the end of the Fed’s last meeting in 2024, the “dot plot” will take center stage
The Fed is widely expected to cut interest rates by a quarter of a percentage point on Wednesday. Less certain is how rates will play out in the new year and beyond.
Although inflation has cooled since the Fed began raising interest rates in March 2022, the final stretch has been difficult. November’s consumer price index reflected a 12-month inflation rate of 2.7%. It is still far from the Federal Reserve’s 2% inflation target.
Stubborn inflation and a resilient economy are leading some on Wall Street to lower expectations for a rate cut in 2025.
Read more from CNBC’s Jeff Cox on Wednesday’s Fed expectations.
—Dara Mercado
