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Fed Chair Jay Powell's cautious approach and economic projections are analyzed. Key points from Powell's press conference include optimistic GDP growth projection and concerns about achieving inflation target. The hosts discuss Powell's recent speech, noting the absence of a cohesive narrative and the risk management approach driving the Fed's decisions. Upcoming focal points for the Fed include limited data before the next meeting, event risk, higher oil prices, student loan repayments, and the temporary nature of the UAW strike and government shutdown. The hosts analyze Powell's remarks on Fed policy, discussing their implications for financial markets and their expectations of the Fed.
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Quick takeaways
- Fed Chair Jay Powell emphasized the need for caution and careful decision-making when it comes to future rate cuts, suggesting underlying risks and uncertainties in the economy.
- Factors such as student loan repayments restarting, a potential government shutdown, and depleting excess savings were highlighted as potential risks to the soft landing scenario projected in the summary of economic projections, emphasizing the importance of monitoring liquidity events and the consequences of quantitative tightening in the background.
Deep dives
Fed leaves rates unchanged, signals one more rate hike this year
During the sixth meeting of the FOMC, Fed Chair Jay Powell announced that the central bank would keep interest rates unchanged and signaled the possibility of one more rate hike this year. Powell emphasized the need for caution and careful decision-making when it comes to future rate cuts. While the Fed's economic projections indicate more optimistic GDP growth and fewer cuts in 2024, Powell stated that a soft landing is not his base case, suggesting underlying risks and uncertainties in the economy. The projection for the Fed funds rate ending in 2024 at 5.1% indicates a higher-for-longer posture, and Powell reiterated the Fed's commitment to break the back of inflation if necessary.
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