Inflation has eased significantly from its highs in mid 2022, but remains somewhat elevated relative to our 2% longerrun goal. Very little data on inflation have been released since our meeting in October. Total PCE prices rose 2.8% over the 12 months ending in September. And excluding the volatile food and energy categories, core PCE prices also rose 2.8%.These readings are higher than earlier in the year as inflation for goods has picked up, reflecting the effects of tariffs. In contrast, disinflation app ...

Federal Reserve Chairman Jerome Powell on Wednesday declined to comment on the upcoming Supreme Court decision that could shape the future of President Donald Trump's trade agenda. "It's not something I want to address here," Powell said during a press conference following the central bank's December interest rate decision. "It's before the courts and we don't think that we help matters by trying to engage," he added.When asked how the Fed would incorporate potential changes to growth and inflation should t ...

Job Market - Fed leaders anticipate more economic growth in 2026 and stable unemployment levels, but express concerns about slowing labor demand and participation. Lower rates could help stimulate hiring [2] - Fed Chair Powell noted that chatbots are not yet replacing jobs, despite some high-profile layoffs in Corporate America. Overall layoff rates remain relatively low [3] Inflation - Inflation remains slightly above the Fed's 2% target, with limited data available due to the government shutdown. Lower rates could risk rising consumer prices, but Powell indicated that strong consumer spending is currently driving inflation, primarily influenced by tariff policy rather than broad economic weakness [4] Markets - Despite a hawkish rate cut, markets rallied sharply, with the S&P 500 nearing a record close and the Dow gaining almost 500 points. Factors from the meeting contributed to increased investor bullishness [5] Future of the Fed - With Powell's term ending in May, a successor will be named in January. Powell aims to leave the economy in good shape, targeting a return to 2% inflation and a strong labor market. Significant division among Federal Open Market Committee members was noted, with three dissenting votes, indicating ongoing tension between employment and inflation risks [6] - Powell emphasized that discussions within the Fed are constructive and respectful, and indicated that a rate hike is not anticipated in the near future. The focus remains on strengthening the economy rather than solely combating inflation [7]

Fed Policy Stance - The market interprets the Fed's recent actions as a dovish meeting rather than a hawkish cut, despite the rate cut [1][2][7][10] - The Fed is perceived to be more focused on employment risks, specifically the potential rise in unemployment, than on inflationary pressures [6] - The Fed seems to downplay inflationary risks, suggesting good progress on inflation, if not for tariffs [3][4][5] Quantitative Easing (QE) and Tightening (QT) - The Fed has unexpectedly ramped up QE by $40 billion, after a period of QT, raising hopes for further QE if needed [7] Interest Rate Dynamics - Despite the Fed dropping rates by 175 basis points since September, the 2-year Treasury rate remains unchanged [6] - The Fed funds rate is now in line with the 2-year Treasury yield [5][6] - Long-term interest rates, such as the 30-year Treasury, have risen by approximately 75 basis points since the Fed started cutting rates [8][9] - The 2s30s Treasury curve has steepened to around 123-124 basis points, approaching the year's high of 130 basis points [10] Economic Assessment - The Fed estimates that monthly jobs gains are overstated by approximately 60,000, suggesting a potentially weaker labor market than reported [2] - The market believes that cutting interest rates is not helpful for long-term interest rates [9] - Cutting rates by 175 basis points has not helped the housing market [8]

After today, you only have three more meetings at the helm of the Fed since becoming Fed Chair. You've seen multiple [clears throat] trade wars, the pandemic, COVID reopening, period of high inflation. I know your term's not up as chair until May, but I'm wondering if you've given any thought to what you want your legacy to be.>> My legacy. I my [clears throat] thought is that um I really want to turn this job over to whoever replaces me in with the economy in really good shape. That's what I want to do.I w ...

I wanted to ask you about how the higher inome households are really [clears throat] driving spending right now. They're backed by home equity and stock market wealth, but lower-income consumers are really struggling with the accumulation of 5 years now of rising prices. It's price levels, not really the inflation rate holding some of these families back.How sustainable is this so-called K-shaped economy and and what are the Fed's thoughts on whether that's a risk going forward. So we do um through our vast ...

Core Viewpoint - President Trump criticized the Federal Reserve's recent interest rate cut, suggesting it could have been more substantial to better support economic growth [1][2]. Group 1: Federal Reserve's Decision - The Federal Reserve cut benchmark interest rates by 25 basis points, marking its third cut of the year [2]. - The decision reflected a divided opinion within the Fed, with two members preferring no change and one member advocating for a larger cut [2]. Group 2: Economic Context - Fed Chair Jerome Powell described the rate cut as a "close call," indicating a cautious approach to future economic developments [3]. - Powell attributed the current inflation levels to President Trump's tariffs, noting that inflation for goods has increased due to these tariffs [3].

uh tenyear rates have are 50 [clears throat] basis points higher than when you started cutting back in September of 2024 and the yield curve basically has been steepening. Uh why do you think that continuing to cut now especially in the absence of data is going to bring down the yield on the thing that will move the economy the most. >> So we're looking at the real economy and focusing on that.And you have you've got when the when the long bonds move around, you've got to look at why they're moving around. ...

Economic Outlook - The yield curve has steepened, with ten-year rates being 50 basis points higher since September 2024, raising questions about the effectiveness of continued rate cuts in the absence of new data [1] - Long-term bond movements are influenced by inflation compensation, which remains at comfortable levels consistent with a 2% inflation target over time [2][3] - The increase in rates is not indicative of long-term inflation concerns but may reflect expectations of higher economic growth [4] Public Concerns and Policy Focus - Despite public concern over high prices and inflation, the focus remains on stabilizing the labor market, which appears relatively stable [5] - The Federal Reserve has a robust network of contacts that indicate high costs are largely due to embedded inflation from previous years rather than current inflation rates [6] - The goal is to restore inflation to the 2% target while also fostering a strong economy with rising real wages and job growth [7][8]

This is now the third time that you've cut this year and inflation is around 3%. So is the message that you're sort of trying to send with that that you're okay with where inflation is for now as long as people understand that at some point you still want to get back to 2% because inflation is relatively stable where it is. >> Everyone should understand and the surveys show that they do that we're committed to 2% inflation and we will deliver 2% inflation.But it's a complicated, unusual, difficult situation ...