A conference with Fed Chairman Jerome Powell has just begun. Below are the most important comments made by the banker:
- Inflation remains somewhat elevated.
- Disinflation in services continues.
- Fed's Powell: I estimate total PCE and core PCE rose 2.8%.
- Available evidence suggests layoffs, hiring remain low.
- Labor demand has clearly softened.
- The shutdown will weigh on economic activity while it persists, but should reverse when it ends.
- Prior to the shutdown, data showed that growth may be on a firmer trajectory.
- Data available suggests outlook for employment, inflation has not changed much since the September meeting.
- December cut is not for sure, far from it.
- Strongly differing views at meeting about how to proceed.
- Further reduction at December not a foregone conclusion.
- Fed's Powell: We haven't made a decision about December.
- Fed's Powell: Today's cut was risk management, going forward is a different thing.
- Traders pare bets on a December Fed rate cut, now see 71% chance, down from 90% previously.
- Fed's Powell: For today's rate cut, a strong, solid vote, and the strongly differing views were really about the future.
Markets moved into sell-off mode following Powell’s comments, which cast doubt on another 25 bp rate cut in December. The U.S. dollar is strengthening sharply, while equity indices are edging lower.
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