The Federal Reserve decided to keep interest rates unchanged coming of out the central bank's two-day policy meeting, followed by a press conference from Chair Jerome Powell, who spoke about the economy and the Fed's target goal of 2% inflation, making mention that a September rate cut could be on the table.
Yahoo Finance Fed reporter Jennifer Schonberger joins Market Domination to break down Powell's comments and what it means for the Fed moving forward.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Nicholas Jacobino
The Federal Reserve holding rates steady while Fed chair Jerome Powell points to the possibility of a rate cut in September. Let's get to Yahoo! Finance's Jennifer Schonberger with the details. Of course, you and your peers there in the press room pressing him on when that rate cut was going to happen, if it would be in September. What was your takeaway from being in the room?
Hey, Julia. You know, he was pretty forthcoming considering the statement. He of course didn't say that the Fed has made any, uh, uh, uh, decisions about future meetings at this juncture, but that the time is growing closer for the Fed to begin cutting rates, and that September is a point of more confidence for the Fed. Take a listen.
The question will be whether the totality of the data, the evolving outlook, and the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market. If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September. So you asked why not today, and I would just say again that the broad sense of the committee is that we're getting closer to the point at which it will be appropriate to reduce our policy rate, but that we're not quite at that point yet.
When I asked Chair Powell whether there's a growing sense of confidence among committee members that the Fed could go in September, he told me, "Yes." Now, Powell says if they see inflation continuing to move down in the manner that we've seen over the second quarter, if the job market remains kind of where it is currently, and the economy remains relatively strong, as we've seen here in the second quarter, then that would be a recipe for the Fed to likely cut in September. However, if we were to see more volatility, more stalling in the inflation data, then they would need to rethink that. However, he says it's very much about the balance of risks here. So they're very much weighing the employment side of their mandate again, not just inflation, as we saw in that statement. Uh, Chair Powell said there's also a real discussion within the committee about pulling the trigger, cutting rates at this meeting, but that the majority of officials decided against that. While they are encouraged with the inflation data they've received in the second quarter, they still need to see more good data before cutting rates. He says we're in a different economy now, with the labor market cooling and inflation coming down. The time is quote, "coming to adjust." And lastly, I just want to note that Chair Powell was asked about President Trump's comments that the Fed should not lower rates in September, and he thinks that the Fed can make decisions in an apolitical manner. He says, "We never use our tools to support a political party or a particular political outcome." Bottom line here, guys, the Fed seriously eyeing September. Back to you.
Jen, thank you so much, our own Jennifer Schonberger there in D.C.