Latest news with #FederalOpenMarketCommittee
Yahoo
2 days ago
- Business
- Yahoo
Powell goes to the White House — and tells Trump the Fed will do its own thing on interest rates
Federal Reserve Chair Jerome Powell met with U.S. President Donald Trump today at the White House to discuss the state of the economy. Powell used the meeting to remind the president of the Fed's independence when it comes to setting interest rates, according to a statement by the central bank. He and his colleagues will 'set monetary policy, as required by law, to support maximum employment and stable prices' and will make those decisions based 'solely on careful, objective, and non-political analysis.' Powell did not offer Trump a roadmap for future interest rates, and instead emphasized policy will depend 'entirely' on incoming economic data. Trump and Powell have long engaged in a turf war over interest rates. The president has called Powell a 'major loser' and a 'total stiff', and floated the idea of trying to fire the central bank chief — before walking that idea back. When questioned about the comments at the Fed's most recent Federal Open Market Committee (FOMC) meeting earlier this month, Powell replied: 'It really doesn't affect either our job or the way we do it.' During that meeting, the Fed said it would keep interest rates steady at 4.25-4.5%, as the central bank continues to work to balance persistent inflation concerns with signs of a slowing U.S. economy. While inflation has cooled from its 2022 highs, recent data hasn't provided sufficient assurance to begin reducing rates once again. The most recent Consumer Price Index (CPI) data shows a 2.3% rise over the past 12 months, according to the Bureau of Labor Statistics, above the Fed's 2% target. The Fed's decision came against a backdrop of slowing economic growth and still-sticky inflation, raising the possibility of a stagflationary scenario. The U.S. economy contracted by 0.3% in the first quarter of 2025, while the labor market showed resilience with 177,000 jobs added in April — a figure that only modestly exceeded expectations. For the latest news, Facebook, Twitter and Instagram.
Yahoo
2 days ago
- Business
- Yahoo
Fed Governor Kugler monitoring markets amid trade shifts, dollar concerns
-- Federal Reserve Governor Adriana Kugler expressed concern on Thursday about the impact of changing trade policies and a potential decrease in investor interest in U.S. dollar assets. She emphasized the importance of understanding how a company's financial health intersects with its international trade exposure, particularly in the current uncertain global economic landscape. Kugler did not provide any future predictions about monetary policy or the economic outlook during her speech at a central bank conference. Her comments come in the midst of an ongoing trade war initiated by President Donald Trump, which has unsettled financial markets and increased economic outlook risks. The president's rapidly changing attempts to significantly raise import taxes to encourage a resurgence of domestic manufacturing suffered a significant setback on Monday. A court decision invalidated a large portion of the current tariff schedule. Many Fed officials and private sector economists believe that the tariffs will likely cause a temporary increase in inflation, while simultaneously increasing unemployment and slowing growth. The president's trade policy has also caused significant volatility in global financial markets and seems to be driving a shift away from dollar-denominated assets. This could have significant implications for the future of the American economy. Kugler highlighted her monitoring of the financial stability implications of a potential decrease in the attractiveness of U.S. financial assets during flight-to-safety events. Recent market activity has shown a reduced interest in U.S. assets as safe havens during periods of stress. Kugler stressed the importance of examining how potential changes in the role of U.S. financial assets as a safe haven might affect financial stability both domestically and internationally. Her comments followed the release of the minutes from the Federal Open Market Committee meeting on May 6-7. During the meeting, some officials expressed concern about how investors approached U.S. assets during the market difficulties in April, as government bond yields increased while the dollar, stocks, and other assets lost value. The minutes noted that a lasting change in these correlations or a decrease in the perceived safe-haven status of U.S. assets could have long-term implications for the economy. Related articles Fed Governor Kugler monitoring markets amid trade shifts, dollar concerns Capital Economics still sees global growth below 3% this year Powell meets Trump, says monetary policy remains data-dependent Errore nel recupero dei dati Effettua l'accesso per consultare il tuo portafoglio Errore nel recupero dei dati Errore nel recupero dei dati Errore nel recupero dei dati Errore nel recupero dei dati
The National
2 days ago
- Business
- The National
Fed's Powell tells Trump rate decisions will be made 'as required by law'
Federal Reserve Chairman Jerome Powell met President Donald Trump at the White House on Thursday, the US central bank said in a statement. The Fed said the meeting occurred at Mr Trump's invitation and that Mr Powell did not discuss his expectations on interest rates, 'except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook'. 'Finally, Chair Powell said that he and his colleagues on the [Federal Open Market Committee] will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis,' the Fed said. The Fed enjoys broad independence to conduct monetary policy without political pressure from the president or Congress. However, Mr Trump has repeatedly lashed out at Mr Powell for not lowering interest rates in recent months. Earlier on Thursday, Mr Trump shared a post on Truth Social that again called on the Fed to cut rates. White House Press Secretary Karoline Leavitt told reporters that Mr Trump conveyed to Mr Powell that he believed he was making a mistake by not lowering rates. "Which is putting us at an economic disadvantage to China and other countries, and the president's been very vocal about that," she said during a press briefing. The Fed has not adjusted US interest rates since December, pointing to heightened uncertainty over Mr Trump's tariff agenda. The current federal funds rate is roughly 4.3 per cent. Minutes released from the central bank's May 6-7 meeting on Wednesday showed that the Fed is concerned about stagflation effects Mr Trump's tariffs may have on the economy. Stagflation indicates a period in which the economy posts weak growth and high inflation. Officials also said the tariffs could force them to choose to rescue only one of their two mandates: either price stability or maximum employment. 'Participants noted that the committee might face difficult trade-offs if inflation proves to be more persistent while the outlooks for growth and employment weaken,' the minutes read. Mr Trump said last month that he would not seek to oust Mr Powell before his term expires as chairman next year, after previously suggesting he has the authority to do so. A Supreme Court ruling last week signalled that a president does not have the legal authority to fire Federal Reserve board members. 'The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,' justices wrote in a ruling that upheld Mr Trump's removal of members of two other independent boards.
Miami Herald
3 days ago
- Business
- Miami Herald
Fed minutes send strong message on interest-rate cuts
Interest rates aren't going anywhere-maybe. Minutes from a meeting of the Federal Reserve Bank leaders, which was held in early May and released on May 29, show the central bank voted to undertake open market operations "as necessary" to maintain the federal funds rate in a target range of 4.2% to 4.50%. In a related action, the Board of Governors of the Federal Reserve System voted unanimously in early May to approve the establishment of the primary credit rate at the existing level of 4.5% – which means interest rates for lenders, consumers and the rest of Americans won't be budging in the near term, much to the dismay of the Trump administration. Don't miss the move: Subscribe to TheStreet's free daily newsletter The minutes of its May 6-7 meeting, known as the Federal Open Market Committee, released May 29, also showed the central bank would allow "modest deviations from stated amounts for reinvestments, if needed for operational reasons." "We are comfortable with our policy stance," Federal Reserve Bank President Jerome Powell said at a May 7 press conference. This stance "will be updated as appropriate to reflect decisions of the Federal Open Market Committee or the Board of Governors regarding details of the Federal Reserve's operational tools and approach to implement monetary policy," the central bank Federal Reserve has a dual mandate to target low inflation and unemployment. It can raise interest rates to slow inflation, but that can cause unemployment. Or it can cut rates to boost job growth, but that can cause inflation. Related: Fed official sends strong message about interest-rate cuts The information available at the time of the May meeting indicated that consumer price inflation remained somewhat elevated. The unemployment rate had stabilized at a relatively low level since the middle of last year, but reported real GDP growth stepped down markedly in the first quarter of 2025. Total consumer price inflation-as measured by the 12-month change in the price index for personal consumption expenditures (PCE)-was 2.3% in March. Core PCE price inflation is the Fed's favorite inflation measure. It excludes changes in consumer energy prices and many consumer food prices. It was 2.6% in March, above the Fed's 2% target. Both total and core inflation were lower than their year-earlier levels. Recent data indicated that labor market conditions had remained solid but have worsened over the past year. The unemployment rate was 4.2% in March and April, equal to its average over the second half of 2024, but up from 3.4% in 2023. Average hourly earnings for all employees rose 3.8% over the 12 months ending in April, little changed from a year ago. According to the advance estimate, real GDP declined 0.3% in the first quarter. However, this first-quarter estimate was likely affected by measurement issues. Based on available data, the outsized increase in imports did not seem to be fully matched by corresponding increases in other spending categories, including inventory investment, resulting in a small decline in estimated real GDP. Indicators of foreign economic activity pointed to a moderate pace of expansion in the first quarter, likely supported in part by front-loaded demand from U.S. importers in anticipation of tariff hikes. Related: Did the Supreme Court just allow Trump to dump Powell? However, more recent indicators suggested weakening momentum, notably in Canada and Mexico, amid elevated uncertainty about global trade policies. Inflation abroad was near central bank targets in most foreign economies, in part reflecting lower energy prices. By contrast, Chinese inflation remained quite subdued. The European Central Bank, the Bank of Mexico, and several central banks in emerging Asia eased monetary policy, citing in part the prospective drag on domestic growth from U.S. tariffs. In their communications, foreign central banks also emphasized the need to maintain policy flexibility amid heightened uncertainty. Goldman Sachs' Roger Kaplan, former Federal Reserve Bank of Dallas president, said May 29 that he didn't think the Fed would move interest rates in June or July. More Economic Analysis: Hedge-fund manager sees U.S. becoming GreeceA critical industry is slamming the economyReports may show whether the economy is toughing out the tariffs However, as clarity evolves around the U.S. tariff instability and unemployment remains steady, Kaplan said he would look for a possible cut come September. "There's a chance of it," Kaplan said in an interview with CNBC on May 29. But he noted that the Fed's current status was "the right thing to do," and that it was "wise" to be patient. More information regarding open market operations and reinvestments may be found on the Federal Reserve Bank of New York's website. Related: Veteran fund manager unveils eye-popping S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Reuters
3 days ago
- Business
- Reuters
New York Fed to start morning Standing Repo Facility operations next month
May 28 (Reuters) - The Federal Reserve Bank of New York said Wednesday that late next month it will add morning offerings for its liquidity providing Standing Repo Facility. The morning Standing Repo Facility, or SRF, operations will join with existing afternoon operations, and will be available starting June 26. "The additional daily morning SRF operations are intended to further enhance the effectiveness of the SRF in its ability to support the effective implementation of monetary policy and smooth market functioning," the bank said in a statement. The SRF was launched in 2021 in a bid to bolster the central bank's ability to provide liquidity to the financial system. It also helps the Fed keep the federal funds rate, its chief tool for influencing the course of the economy, in line with levels targeted by the rate-setting Federal Open Market Committee. The SRF takes in Treasury and agency securities from eligible firms in exchange for fast cash loans, and essentially makes available on a constant basis liquidity once provided by discretionary Fed repo operations. The tool has essentially gone unused through its lifespan with the exception of modest usage at the end of the third quarter last year, when money markets navigated a short-lived period of stress. Roberto Perli, the New York Fed official responsible for implementing monetary policy for the central bank, had been noting that morning operations would join those offered in the afternoon. "This will be an important step in enhancing the efficacy of the facility," Perli said last Thursday, and a more effective SRF could also allow the Fed to shrink its holdings of bonds by more than would otherwise be the case. He also nudged reluctant financial firms to tap the SRF, saying "I encourage our counterparties to use the SRF when it makes economic sense." The morning SRF availability will kick off on June 26, with the cadence of afternoon operations remaining as they are now. In a statement, the New York Fed said that it will cap total daily SRF operations at $500 billion. The closing time for the morning operations will be 8:30 a.m. ET. Early SRF operations have already been deployed around year and quarter ends, and while they have gone unused, some believe their availability helped bolster market confidence around periods that can be volatile in money markets. The New York Fed's SRF announcement followed closely on the heels of the release of minutes from the Fed's meeting minutes covering its early May Federal Open Market Committee meeting. The minutes weighed in heavily on the unsettled financial conditions that abounded in the run up to that gathering, spurred on by President Donald Trump's global trade war. While stress was real and broad based during that period, the minutes noted that Fed staff as well as policy makers saw orderly trading amid the tumult. Fed officials also signaled some concern on valuation levels in markets. The minutes also touched on the SRF, and noted "market outreach indicated that dealers had a higher willingness to use the facility when early settlement was offered." The minutes also said some Fed officials believed that a move to central clearing for the SRF might bolster usage in times of trouble. The looming launch of early SRF operations may not change much for now, however. Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York, said "usage of the regular afternoon SRF currently stands at zero and we don't expect SRF usage to increase simply because of the added operation." "During times of stress, conducting twice daily operations will be helpful in helping to backstop markets," Goldberg said, adding "there will probably still be some stigma in using the facility, which is something the Fed has been battling against in recent years, but the additional operation should eventually prove helpful." Stigma issues have dogged parts of the Fed's lending operations for some time, because many financial firms believe that tapping central bank cash, even when encouraged to do so by central bankers, signals weakness. Stigma issues have been most acute for the Fed's Discount Window lending facility for deposit taking banks, but some have said these concerns extend to the SRF as well.
