Fed meeting, rates still stuck at 5.50%. But they could increase, Powell's words

Fed meeting today, November 1st: rates stuck at 5.50%, as expected.
Attention was indeed high towards the US central bank as its November meeting came at a complex and delicate time for the global economy and finance.
The surge in bond yields offered an additional incentive to further pause the rise in the cost of money.
In its meeting statement, the FOMC reiterated that inflation remains high, highlighting that the economy has been expanding at a rapid pace.
And this data, it must be underlined, does not help the central bank's task since it keeps the demand that raises inflation solid.
The indications were cautious and awaiting further developments: “More restrictive financial and credit conditions for families and businesses will likely weigh on economic activity, hiring and inflation.
The extent of these effects remains uncertain.
The Committee remains very alert to inflation risks.” The forecasts for the Fed meeting on November 1st were nevertheless met.
Powell spoke at the press conference, underlining caution and an approach faithfully linked to economic data.
Fed meeting, another pause in rate hikes.
What Powell said The US central bank's announcement that interest rates were still on hold, for the second time in a row, had a limited impact on the financial markets as the central bank did not bring any major innovations or surprises to its monetary policy.
Growth is strong, the job market remains tense and there is still a long way to go to tame inflation: this is the summary of the decision and also of Powell's words in the press conference.
The Fed president recognized the damage to families resulting from both inflation and the decision to raise rates as happened previously.
However, the focus on achieving the 2% price target, and therefore their stability, prevents the FOMC from thinking about cuts or reductions in the cost of money.
Rather than asking when the first interest rate cuts will be possible, the appropriate question must be whether there is a need to increase further.
There is also uncertainty about what will happen at the December meeting.
“We're still trying to gain confidence about what the appropriate policy position is,” Powell said.
“But the risks of doing too little versus those of doing too much are now becoming more balanced,” he added.
From this perspective, it can be expected that "higher for longer" or, indeed, other rate increases are in the Fed's future strategy.
Powell also recalled that the effects of the Fed's increases are being seen.
But not so much in terms of debt renewal.
It will take time, he said.
It refers to the rebalancing of financing costs upward as bonds and corporate loans mature and are refinanced at higher rates.
Powell also highlighted that the economy will likely need to see slower growth and a weaker job market for inflation to truly come under control.
Finally, maximum attention should also be paid to Treasury yields which have skyrocketed in recent days.
There is market observation, but according to Powell, these high levels of yields should be persistent in order to replace the Fed's actions on rates.
Fed meeting 1 November, decision and press conference There is great interest in the update on US interest rates, after the ECB decided on a pause at the end of October.
Live coverage of the markets, the decision and the press conference: 8.22pm Press conference over Powell's press conference is over.
8.18pm Inflation Expectations Powell says: “It's clear that inflation expectations are in a good place.
People believe that inflation will fall, this is essential to win the battle." 8.14pm End of interest rate cycle? “We have come a long way with this rate hike cycle.
We are close to the end of the cycle,” explains Powell.
8.04pm Inflation “High inflation is painful for people…the best thing we can do for the United States is to fully restore price stability, with as little damage as possible,” Powell emphasizes.
“We are very pleased that we have made significant progress without a spike in unemployment,” he adds.
19:52 Future decisions For the future, Powell repeats that the question to ask is whether it is necessary to raise rates again, not when to cut them.
The Fed is not thinking about lowering rates.
19:42 High yields “We are attentive to the increase in long-term yields,” reiterates Powell.
“Higher rates may have implications for monetary policy, but they should be persistent.
Higher yields are reflected in the market and have an effect on lending,” he explains.
7.38pm The work on inflation is not done Powell suggests the data could justify further tightening of monetary policy.
“We will continue to make our decisions meeting after meeting,” he adds.
Furthermore, “reducing inflation will likely require a period of below-potential growth and weakening labor market conditions.” 7.36pm Caution Powell reiterates that considering the progress made and the uncertainty, "we are moving with caution." 19:33 General situation of the US economy Powell offers an overview of the economic situation that led to the decision: The full effects of the tightening of monetary policy have yet to be felt and the economy has expanded well above expectations.
The labor market remains tight and labor supply and demand conditions continue to reach a better balance.
Nominal wage growth has shown some signs of slowing.
7.32pm Press conference started Powell began speaking at the press conference, summarizing the monetary policy decision.
7.24pm Unanimous decision In the official note on today's meeting we read that all FOMC members voted to keep rates stable at 5.50%.
7.21pm Press conference in 10 minutes Powell is now eagerly awaited at the press conference.
The interest is all in the next moves, both for the December meeting and for 2024.
19:04 Monetary policy decision Recent indicators suggest that economic activity expanded at a rapid pace in the third quarter.
Job growth has moderated since the start of the year but remains strong, and the unemployment rate has remained low.
Inflation remains high.
The US banking system is solid and resilient.
Tighter financial and credit conditions for households and businesses will likely weigh on economic activity, hiring and inflation.
The extent of these effects remains uncertain.
The Committee remains very attentive to inflation risks.
The Committee seeks to maximize employment and inflation at a rate of 2% over the long term.
In support of these goals, the Committee decided to maintain the target range for the federal funds rate between 5.25 percent and 5.50 percent.
The Committee will continue to evaluate additional information and its implications for monetary policy.
In determining the amount of further monetary policy tightening that might be appropriate to bring inflation back to 2 percent over time, the Committee will consider cumulative monetary policy tightening, the lag with which monetary policy affects inflation.
economic activity and inflation, and economic and financial factors.
developments.
Additionally, the Committee will continue to reduce its holdings of Treasury securities, agency debt, and agency mortgage-backed securities, as described in previously announced plans.
The Committee is strongly committed to returning inflation to its target of 2%.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook.
The Committee would be prepared to appropriately change the direction of monetary policy if risks emerged that could prevent the achievement of the Committee's objectives.
The Committee's assessments will take into account a broad range of information, including readings on labor market conditions, inflationary pressures and inflation expectations, as well as financial and international developments.
Voting for the monetary policy action were Jerome H.
Powell, president; John C.
Williams, vice president; Michael S.
Barr; Michelle W.
Bowman; Lisa D.
Cook; Austan D.
Goolsbee; Patrick Harker; Philip N.
Jefferson; Neel Kashkari; Adriana D.
Kugler; Lorie K.
Logan; and Christopher J.
Waller.
19:01 Rates still unchanged Interest rates remained stable at 5.50%, as expected.
18:51 Rate Prediction 2023 and 2024 Interest rates are expected to remain steady today, but perhaps rise 25 basis points in December.
Are only 2 cuts planned for 2024, or will the direction change again? 18:47 Euro dollar falling 10 minutes after the rate was published, the EUR/USD continues to float in negative territory below 1.0550.
The US dollar is benefiting from a cautious stance as investors await the US Federal Reserve's (Fed) monetary policy announcement.
18:42 Treasury yields The yield on government bonds is falling to 4.8%.