Latest news with #JuneMeeting
Bloomberg
09-07-2025
- Business
- Bloomberg
Minutes Show FOMC Split Over Inflation Concerns
CC-Transcript 00:00So let's get to it because we've been trying to give our own Stewart Paul a little bit of time to get through those Fed minutes. There's a lot there. A lot of times there's not a lot of new stuff, but sometimes there are some nuances that are really important. He's been poring over those latest FOMC minutes, as we said, from that Fed meeting on June 18th. Stewart, of course, is Bloomberg Economics US economist, and he's here in studio. We know you're going through it. Tim Breaking down some of the headlines. What are you seeing that maybe jumps out that you think is interesting for the Bloomberg audience? What really matters, as you said, is the nuance in the minutes. And as Tim pointed out, it was just a couple committee members who are open to a rate cut at the coming meeting. Okay. So we're most likely not going to get a cut at the coming meeting. The question is really if we're going to get September and or December with some officials, some being more than a couple, some officials saying no rate cuts this year, there is more risk that rate cuts will remain on hold, adding to the idea that rate cuts are going to remain on hold. Most many officials are saying it's going to take some time for tariffs to raise prices and many, which is, you know, a significant a significant adjective that's used. And in these minutes, we're always looking for the adjectives. That's right. Many are expecting a gradual softening of labor market conditions. So we know that the members of the committee are putting more weight on the inflation mandate. They're expecting inflation pressures to become more pronounced. It's going to take some time. And they are expecting the gradual softening of the labor market, which will allow them to stay focused on inflation in the near term. Okay. Speaking of inflation, officials saw tariffs are still likely to put upward pressure on prices. Stuart, this coming on a day where we heard from stephen Miron, the white House Council of economic advisors chairman who says there's been no evidence to show that president Trump's tariffs have been inflationary. Do you agree with his assessment? No. So I pored over the CEO's report. They used basically an imputed price index for imports, separate and apart from what we get from this CPI. So it's not like there is this separate goods or core goods import price index that persistently has a wedge to the actual CPI figures that we're talking about. And it's way too early to say. The tariffs have had no effect on import prices. When you look item by item within the CPI and we'll get CPI data next week, it is evident that there are price pressures for things like appliances, there are price pressures for things like electronics, and the members of the Fed are going to be looking at that, as are the staff members. Hold out. Explain explain that again, because you went over this report from the CIA. Sure. What was the math that the CIA used in order to come to this? So the CIA attempts to create its own synthetic imported goods price index. That is separate and apart from the headline figures that we see in the CPI. That imputed price index looks at the portion of goods that have imported parts, and it then tries to identify a price index that would apply to that imputed set of goods that that set of categories. And that report showed that there is a persistent wedge between the headline CPI figures and this goods CPI synthetic index. But again, it's way too early to use some sort of mathematical model to declare victory over inflation and say the tariffs won't present any sort of inflation pressures. We know that the Fed's internal models look top down and say, what is the average effective tariff rate, which from the time that these minutes were written to today when they are released, the average effective tariff rate went up. Right. And so we know the Fed's internal models are going to be marking relatively more inflation today than they did when they were having these deliberations June 18th. And at the time of the meeting, staff members were breathing a little bit of sigh of relief, reading from the minutes here. They were marking up their growth forecast and down their inflation forecasts relative to what they saw in May. By the time June came around, they saw things as slightly less stagflation area. We know that with slightly higher average effective tariff rates today relative to June 18th, the Fed is going to be a little bit less easy in their inflation outlook. Well, it's also easy. Like I think about our interesting you think about the last jobs report showed strength in the labor market, right? That's right. So maybe that also reduces that thought of the stagflation area environment, too, or what? Like how do you kind of continue to layer in everything, Stuart, when tariffs are still a big question. Well, so we know that many members of the FOMC look at non-farm payrolls and they discount them pretty heavily. The member of the FOMC disregarded a significant share of payroll growth that we see because of the BLS birth death model, which we've talked about ad nauseum over the past couple of years. The other thing to keep in mind is that members of the FOMC are expecting to see a gradual softening of labor market conditions. And so you might think, wouldn't they be? You know, rest assured, everything is gray. The unemployment rate ticked down in the latest jobs report, but it ticked down because of a shrinking labor supply in the sense of improved balance in the labor market. Maybe they could be breathing a sigh of relief, but I would hardly call that a robust and dynamic labor market when unemployment is declining because of weaker labor supply. And furthermore, the when looking at the jobs report and thinking about the minutes that were just released right now, wage growth slowed, hours worked, declined, and the late the aggregate amount of labor income that was reported in the report based on payroll growth, wage growth and hours growth was about zero between May and June. And so softening labor market conditions right, are still evident. They should not be necessarily resting easy because of that June report. All right. So let's get to something that we've all been reading about. First of all, we know President Trump continuing to criticize Fed Chair Jay Powell. Here's first of all, what he said from the Oval Office. This was yesterday. He should resign immediately. We should get somebody and that's going to lower interest rates. You want congressional? Why don't you call for his resignation? It's do you want congressional Republicans to investigate, disagree with me? I think he's terrible. He's always late, but he wasn't laid with Biden before the election. It was cutting him like crazy. It didn't help too much, did it? All right, everybody. That was President Trump yesterday from the Oval Office and then today he was out on social media once again reiterating his call for Fed Chair Jay Powell to, quote unquote, lower the rate and talk about the cost to the U.S. economy by not doing so Stuart. He says the Fed's interest rate is at least three points too high. You have emphasized rate in the past when he's talked about what bringing it down by 2 to 2 basis points. Yeah, if it was also low. Go ahead, Carol. Well, I was going to say, based on your analysis of the US economy, is the Fed behind that much no curve in cutting U.S. interest rates? I mean, so if we have to cut that much, aren't we like in a recession depression? So the argument that someone would have to make for somebody like Trump to make this argument that the federal funds rate should come back, come down by 300 basis points, he's really just looking at something like nominal growth, nominal GDP growth, which was running between six, seven, seven and a half percent when the Fed was hiking. Yeah. And in the first quarter registered about three and a half percent because there was a real contraction, shrinking GDP, and there is still persistent inflation. But the reality is that private domestic final demand growth is still running at an annualized pace. So that's consumption and fixed investment. We're ignoring things like inventories, we're ignoring things like exports, net exports and the drag from imports. When you look at private domestic final demand growth, it's still running between one and a half and two and a half percent over two and a half years. And so with inflation risk still skewed to the upside, as members of the FOMC are saying in the minute, the broad swath of members of the FOMC and the staff see inflation rescue to the upside. It's no wonder why they're sitting pat. Domestic fundamentals are in especially bad and the inflation risk is skewed to the upside. And when that's the case, it would be a bit peculiar to cut rates going into what feels like a persistent expansion. You know, I think about the way that the president does want to control the Federal Reserve in the rate environment. And I think of a country like Turkey, for example, the central bank like Turkey, and we we've seen inflation ramp it. And sort of I wonder just about sort of like be careful what you wish for when it comes to a central bank not being independent. What would happen if the central bank were to lose independence and lose complete control over the back end of the curve? And that's and that would explain what would happen, though. Yeah. So if the Fed were to step up and attempt to lower the short to lower short term financing costs, which is really where they have the most control, and they were to attempt to inject liquidity into the financial system by, let's say, purchasing bonds, it would ultimately lose confidence of investors more broadly in the market, which matter most for controlling long term rates. Folks would have to started compensating for anticipated inflation, which would be a running of it, which would be running considerably higher. If the Fed loses credibility that it is committed to its 2% inflation target, investors have to add an additional inflation compensation to long run rates, and that weighs on financing costs, that weighs on growth, that raise that weighs on investment prospects. So with the Fed capitulating to political pressure is really a it's an existential crisis for monetary policy makers. There's a sense in which the there's a sense in which the president pressuring the Fed has the absolute opposite of the intended effect. If the Fed chairman is going to retain any sort of credibility, the president would be better off by suggesting growth is robust. And so you should you should keep rates where they are. If he were to actually want the Fed to cut, he should be trying to persuade the Fed that, you know, by maintaining your independence, you would be cutting, bottom line, not good if there's not an independent Fed. Got to leave it there. Stuart, thank you so much. Always, always breaking down. Stuart Paul, Dr. Steve King, a year ago. Yeah. Congratulations. Thank you. Oh, he's had it. I just. We just don't call him doctor, okay? Yeah, There's apparently a doctor in the house. There is. We'll be in touch. Congratulations. If only I had the prescription. Living economics. You as economist and doctor. Dr. Stuart Paul.
Wall Street Journal
08-07-2025
- Business
- Wall Street Journal
Tariffs, Fed Minutes, Delta Results: Still to Come This Week
The Federal Reserve, led by Chair Jerome Powell, will release minutes from its June meeting on Wednesday. (Alexandra Citrin-Safadi/WSJ)
CBS News
11-06-2025
- Business
- CBS News
Will home equity loan rates fall after the June Fed meeting? Here's what experts say.
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. The potential for home equity rates to fall further after the June Fed meeting depends on multiple factors. Getty Images Even with cooler inflation, the Federal Reserve has kept interest rates steady through the first half of 2025. This cautious approach has left homeowners wondering when borrowing relief might come, particularly with the Fed's June meeting right around the corner. Will policymakers signal future rate cuts or continue to hold the line? This question looms large if you're considering a home equity loan or home equity line of credit (HELOC). While Fed decisions don't directly control these rates, they do influence the broader interest rate environment that affects your borrowing costs. We asked mortgage analysts and lending professionals what homeowners can expect from home equity rates after the June meeting. Below, we'll examine their predictions. Start by seeing how low of a home equity loan rate you'd currently qualify for here. Will home equity rates fall after the June Fed meeting? Industry professionals generally don't expect a notable decline right after the June 18 Fed meeting. "I don't see home equity rates dropping much," Steven Glick, director of mortgage sales at real estate investment fintech company HomeAbroad, says. The odds favor the Fed keeping rates unchanged this month, largely because inflation remains above the 2% target and the economy continues to hold up. When rate changes do come, though, they won't affect all home equity borrowing the same way. Debbie Calixto, sales manager at mortgage lender loanDepot, explains that HELOCs are tied to the Prime Rate, which closely follows the Federal Reserve's benchmark interest rate. "When the Fed lowers its rate, HELOC rates usually decrease by a corresponding amount," she says. Home equity loans, however, connect more to the bond market and broader economic conditions rather than the Fed's interest rate. "While fluctuations are always possible, home equity loan rates will likely remain stable following the Fed's June meeting," predicts Calixto. "Barring any significant economic events, we can expect only minor movements in these rates [this] month." Looking beyond June, the picture improves. Glick sees better odds of a rate cut by fall — and if that happens, he expects home equity rates to ease modestly. Joe Perveiler, senior vice president and home lending executive at PNC Bank, also thinks rates will likely fall over the next six months. However, pinpointing exactly when is difficult. See what HELOC rate you'd be eligible for here. Key considerations when weighing home equity borrowing Beyond keeping an eye on the Fed's imminent move, experts say three practical factors should guide your home equity borrowing decision: Understand your true purpose for borrowing Glick emphasizes being crystal clear about why you need the money. "Using equity for home improvements that add value or to pay off high-interest credit card debt makes sense," he says. "But using it for vacations or risky investments … you're putting your home on the line." Debt consolidation represents one of the strongest cases for home equity borrowing. "If [you're] looking to consolidate debt, today's home equity rates are still substantially lower than average credit card or personal loan rates," Perveiler points out. "It's an excellent option to save on interest costs and lower [your] monthly payments." Know your home sale timeline and long-term goals Besides interest rates, timing matters. "If you plan to sell within the next few years, drawing down your available equity now could limit your flexibility and financial gain when it's time to sell," warns Calixto. She also stresses considering how accessing your home equity fits into your big-picture financial goals. "Will this decision delay retirement savings, college funding or other major milestones? Be sure the short-term advantages don't come at the expense of long-term financial health," she adds. Ensure you can handle the payments Dean Rathbun, executive vice president of United American Mortgage Corporation, encourages asking yourself: "Do I need these funds, and do I have a plan to pay off this debt in the foreseeable future?" HELOCs come with a payment structure that trips up many borrowers. "The most common overlooked item is that the initial years of a HELOC are interest-only," Rathbun explains. "By making the minimum interest-only payments, the balance remains the same. Try to make [more] principal paydowns as you go, so once the loan becomes fully amortizing, the payment won't be as high." Calixto highlights the stakes involved. "While missing a credit card payment might damage your credit score, falling behind on a mortgage can have much more serious consequences, including foreclosure risk," she cautions. The bottom line Instead of getting hung up on home equity loan interest rates alone, Glick advises focusing on your financial stability and what you're trying to achieve. Remember that your home functions as collateral here, so thoughtful borrowing matters more than perfect timing. If you're considering equity borrowing options now, speak with a couple of home lenders to compare rates and full terms. A credible one will help you determine if tapping your home's equity matches your financial goals this June.
Forbes
29-05-2025
- Business
- Forbes
Fed 98% Likely To Leave Key Rate Intact After Latest Meeting Minutes
Tierney L. Cross/Bloomberg Federal Reserve officials are 98% likely to leave the benchmark federal funds rate unchanged at their next meeting in June after the central bank's latest monetary policy meeting minutes depicted economic conditions as highly uncertain. There is a 97.8% chance that Fed policymakers will decide to keep the target range for the fed funds rate, which has significant implications for broader borrowing costs, intact at their next policy meeting on June 18, according to data provided by the CME FedWatch Tool following the release of the latest policy minutes. The graphic below provides a screenshot of the aforementioned tool taken close to 8 p.m. EST: This tool shows the likelihood that Fed officials will keep the benchmark rate unchanged at their ... More next policy meeting. Such policy decisions can have implications for a wide range of risk assets like cryptocurrencies and stocks. Many of these assets do not make regular payments, and as long as the benchmark rate stays high, it will place upward pressure on the yields paid by many fixed-income financial instruments. This set of circumstances could potentially reduce demand for the aforementioned risk assets. The minutes of the central bank's latest policy meeting, which involved members of both the Board of Governors of the Federal Reserve System and the Federal Open Market Committee, emphasized that the financial institution's officials might encounter challenging circumstances that could complicate their ability to make policy decisions. 'Participants noted that the Committee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for growth and employment weaken,' the minutes stated. 'Participants observed, however, that the ultimate extent of changes to government policy and their effects on the economy was highly uncertain.' At the same time, the policymakers did speak to strength in the job market, stating that 'Participants further noted that the unemployment rate had stabilized at a low level and that labor market conditions had remained solid in recent months.' 'In this context, and amid a further increase in uncertainty about the economic outlook and a rise in the risks of both higher unemployment and higher inflation, all participants viewed it as appropriate to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent,' the minutes continued.
