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(LIVE) Powell's press conference

9:32 pm 12 June 2024

Fed left interest rates unchanged in the 5.25-5.50% range, in-line with market expectations. Statement repeated that FOMC needs greater confidence in inflation returning to target before cutting rates. New 'dot-plot' showed just a single rate cut this year, compared to 3 cuts in March projections. However, there was an almost 50-50 split between members who saw 1 cuts and those who saw 2. Inflation forecasts were boosted. Overall, the statement and new projections can be seen as hawkish. Market reacted with USD gaining, while indices and gold moved lower. Market attention now turns to Powell's presser during which Fed chief will explain today's decision in more detail.

Post-decision press conference of Fed Chair Powell began at 7:30 pm BST. Below are key takeaways (live updates).

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Opening statement

  • Economy has made considerable progress towards inflation and employment gains over the past two years
  • Inflation eased significantly, but is still too high
  • Fed maintains restrictive stance of monetary policy
  • Recent indicators suggest that economy continued to expand at a solid pace
  • Fed expects GDP to slow from last year's pace
  • Labor market is coming into better balance
  • We expect labor market strength to continue
  • Recent monthly inflation readings have eased somewhat
  • Risks to achieving the dual mandate are in better balance
  • So far this year we have not got greater confidence on inflation in order to cut
  • We will need to see more good data to bolster confidence on inflation
  • Economic projections are not a plan
  • If economy remains solid and inflation persists, we are prepared to maintain the rate where it is as long as appropriate

Q&A session

  • If jobs are to weaken unexpectedly, Fed is ready to respond
  • We don't have high confidence in forecasts
  • Test for cutting rates is more confidence that inflation is moving towards 2%
  • We have a fairly conservative forecast on inflation, if we get better reading, I think we will see the forecast come down
  • Policymakers are not trying to send a strong signal with forecasts
  • Unexpected weakness in the labor market could also call for a response
  • FOMC members were allowed to update their economic projections to incorporate today's CPI data, but most didn't update their forecasts
  • Employment is still strong, but unemployment moved up a bit and that's an important statistic
  • Its no longer super heated labor market of a few years ago
  • Today was a better inflation report than almost anyone expected 
  • We have to see what today's data means for the balance of risks
  • People are coming to the view that rates are less likely to go down to pre-pandemic levels
  • Policy is restrictive and the question of whether its restrictive enough will be answered over time
  • We think our policy stance is about right
  • We are seeing what we wanted to see in the economy right now
  • Still seeing elevated inflation in non-housing services
  • There's been surprising increase in import prices of goods
  • 2% inflation target will likely require a lower wage growth
  • Credit card balance and defaults are not at high levels

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.

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