Max Zhang’s Post

Federal Reserve officials dialed back their expectations for interest-rate cuts this year, though Chair Jerome Powell kept the door open for more as he emphasized the new forecasts represented a conservative approach. Policymakers' updated economic projections, published after a two-day policy meeting in Washington on Wednesday, showed they expected to lower borrowing costs only once in 2024 instead of the three reductions penciled in previously, according to their median estimate. The US central bank's policy-setting Federal Open Market Committee decided to hold its benchmark rate steady in a range of 5.25% to 5.5%, the highest level in more than two decades, for a seventh straight meeting. Investors currently see two rate cuts this year, with better-than-even odds of an initial reduction in September, according to futures. Although the committee was briefed on them, he said "most people generally don't" update their projections when such data arrive in the middle of policy meetings. Officials marked up their forecast for inflation excluding food and energy to 2.8% in 2024 from 2.6%, implying little additional progress over the course of the year from current levels. "Chair Powell used the press conference to diminish the importance of these projections and made a point of indicating that 'most' officials likely did not incorporate today's softer-than-expected inflation reading in their economic projections and 'dots, rendering them stale," Citigroup Inc. economists led by Andrew Hollenhorst said in a note to clients, referring to the "dot plot" of rate projections.

Breaking: here is FED FOMC statement: https://lnkd.in/eBjzgg-u "Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments." Will the FED continue to take a cautious approach, singling that it may be ready to cut rates, when they have full confidence of more data points - seeing inflation coming down close to 2% in the longer term? I personally think so, but stay tuned for Chair Powell's session

Federal Reserve officials dialed back their expectations for interest rate cuts this year, though Chair Jerome Powell kept the door open for more as he emphasized the new forecasts represented a conservative approach. The Federal Reserve recently decided to keep its benchmark interest rate steady at its current range of 5.25-5.5%, a 23-year high, to continue applying downward pressure on inflation. Despite this, the Fed hinted that rate cuts might occur later in the year if inflation shows consistent signs of cooling. This decision reflects the Fed's cautious approach as they monitor economic indicators closely, particularly given the historical context where premature rate cuts led to resurgent inflation in the 1970s. Market expectations align with this cautious stance, predicting a potential rate cut by late 2024, depending on further economic developments. Being in the human capital space the sign of a brighter future may be hinted at with job growth and consumer spending being surprisingly resilient despite high borrowing costs. What are some thoughts on this more conservative approach by the Federal Reserve here at the midway point of 2024? #federalreserve #interestrates #inflation #ratecuts https://lnkd.in/ghNcj_h4

The Fed released a statement today which you can read in the link. Some key points: • Economic activity expanded and at a strong pace • Job gains moderated but remain strong with low unemployment • Inflation remains elevated • The Committee decided to maintain the target range for the federal funds rate • The Committee remains highly attentive to inflation risks • The Committee will continue reducing its holdings of Treasuries, agency debt, and MBS • The Committee is strongly committed to returning inflation to it's 2% objective • The Committee would be prepared to adjust the the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals #nonqm #mortgagebrokers #loanofficers #luxurymortgagewholesale

The FOMC keeps the target Fed Funds range at 5.25% to 5.50%. Highlights of the September 2023 FOMC rate decision. (21/09/2023) The Fed kept rates unchanged at the September 2023 meeting. Highlights: Target rate 5.25% – 5.5% 2023 end of year target rate: 5.6%, unchanged from June 2024 end of year target rate: 5.10% from 4.6% in June Economic activity has been growing steadily. Job gains have decelerated but remain robust; unemployment is low. Inflation is currently high. The U.S. banking system is stable and robust. Stricter credit conditions may impact economic activity, employment, and inflation. The exact impact of these conditions is still uncertain. The Committee is highly focused on inflation risks. The Committee's goals are maximum employment and a 2% inflation rate over the long term. The target range for the federal funds rate is set at 5-1/4 to 5-1/2 percent. The Committee will evaluate further information and its implications for monetary policy. Factors considered for policy adjustments include the overall tightening of monetary policy, its delayed effects on the economy, and other economic and financial events. The Committee plans to reduce its holdings of Treasury securities and other agency debts and securities. The primary aim is to bring inflation back to the 2% target. The Committee will keep assessing the economic outlook based on incoming data. If risks arise that could hinder the Committee's objectives, they are ready to modify the monetary policy stance. Their evaluations will consider various data, including labor market stats, inflation trends, financial, and global events. https://lnkd.in/g7tCmHtm #affinmoneybrokers

**FED RATE DECISION - Hold & Hawkish** The Federal Reserve announced its decision last week on the much awaited impact on interest rates. 💡The Fed decided to maintain interest rates unchanged for September; holds benchmark at 5.25-5.5% target range, signaling a continuation of the status quo. Nevertheless, they alluded to the potential for one additional rate increase later this year, following several rate hikes implemented since March 2023 💡Tech stocks in the United States faced significant declines, largely to their nature as long duration, rate-sensitive assets 💡Meantime, yields on US Treasuries increased across the board, reflecting the Federal Reserve's plan to raise rates in 2024 and 2025 💡High-yield issuers experienced the most notable widening of credit spreads, particularly within the segment of fixed-income assets that were considered overvalued 💡The US dollar was the main beneficiary of the hawkish sounding Fed, gaining against most majors and also gold which, however, continued to trade well above USD 1,900/ounce. Crude oil (Brent) remained near USD95 per barrel due to tight supply conditions, including in product markets 💡In Europe, the most recent PMI surveys for the eurozone reaffirmed the difficult economic conditions, with persistent readings significantly below 50 in both manufacturing and services sectors 💡As China's economy grapples with various challenges, notably the ongoing and painful deleveraging of its property sector, India seems to be on a different trajectory, gaining momentum. Recent projections indicate that India's potential growth could exceed 8% by the end of the decade, driven by a series of domestic reforms Despite the Federal Reserve's decision causing a surprising selloff in financial markets, given the Fed's consistent messaging throughout the summer, the prevailing consensus suggests a scenario akin to a soft landing or even a Goldilocks scenario (neither too cold nor too hot). Forecasts anticipate a couple of weaker quarters as we approach the turn of the year, potentially providing the period of below-average growth that the Fed aims for in its efforts to curb inflation. (Source: https://lnkd.in/dr3CC9CC)

The US central bank has left its key interest rate unchanged again, while it looks for more evidence that inflation is coming under control. The decision kept the target range for the Federal Reserve's influential rate in the range of 5.25%-5.5%, the highest in more than two decades. The Fed is debating whether higher borrowing costs have done enough to ease the pressures pushing up prices. Officials said they still expected to cut rates by the end of the year. But after raising borrowing costs aggressively in response to soaring prices in 2022, the bank is proceeding cautiously. "We want to be careful and fortunately with the economy growing, the labour market strong and inflation coming down, we can" be, Fed chairman Jerome Powell said at a press conference after the Fed's meeting. Forecasts released after the meeting showed that officials expect the economy to grow 2.1% this year, a significantly more rosy outlook than the 1.4% they projected in December. The forecasts also showed officials expect inflation to fall to 2.4% by the end of the year, approaching the 2% rate the bank wants to see. Mr Powell said officials were not overly concerned by some recent data, which has suggested that progress might be stalling. The inflation rate was 3.2% in the US last month and 3.1% in January. Read more ➡️ https://buff.ly/3VrXjdS The Scottish Chambers of Commerce Network is here to support your business - reach out to share your views, concerns and opportunities. #SCCnews #businesssupport #businessnetwork #businessvoice #businessleader Sign up for the Scottish Chambers of Commerce enewsletter at https://buff.ly/3CpsQnu

Federal Reserve Chair Jerome Powell reiterated to lawmakers that the US central bank is in no rush to cut interest rates until policymakers are con- vinced they have won their battle over inflation. In prepared testimony to a Hou- se panel Wednesday, the Fed chi- ef said it will likely be appropria- te to begin lower borrowing costs "at some point this year," but ma- de clear they're not ready yet. The remarks echoed a consis- tent message from nearly every Fed official in recent weeks: The economy and labor market are strong, meaning policymakers have time to wait for more evi- dence that inflation is headed back to their goal before cutting interest rates. "The committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably to ward 2%," Powell said in brief prepared remarks to the House Financial Services Committee, where he is set to testify at 10a.m. Wednesday. The Fed chief is on Capitol Hill for the first of two days of his semi annual monetary policy testimony, and is scheduled to appear before the Senate Banking Committee on Thursday. Treasury yields remained mostly lower on the day after the re- marks were released, and S&P 500 index futures held gains while the dollar was lower. Fed officials are in the last ro- unds of an aggressive fight to contain inflation. After raising their benchmark federal funds rate more than five percentage points starting in March 2022, they've held rates steady since July amid easing price pressures. Central bankers are now grappling with how soon and how far they should lower rates. Cut too early, and officials worry they could fuel a pickup in economic activity that keeps inflation above 2% - the rate they see as appropriate for a healthy economy. Ke- ep borrowing costs elevated for too long and they risk tipping the economy into a recession. "We believe that our policy rate is likely at its peak for this tightning cycle," Powell said in his prepared remarks, repeating language used at his last press - conference on Jan. 31. "If the economy evolves broadly as expected, it will likely be appropriate to -begin dialing back policy restra- int at some point this year. But - the economic outlook is uncertain, and ongoing progress toward g our 2% inflation objective is not assured."

Interesting decision of the Federal Reserve yesterday to NOT raise the interest rate (staying at 5-1/4 to 5-1/2 percent), considering that they acknowledge that "the unemployment rate has remained low. Inflation remains elevated." Today, emergent currencies, such as the Mexican peso take the gains of this decision. It all indicates that next Thursday, Banxico will follow the Fed's trend it its monetary policy committee. #economy #monetarypolicy #economicgrowth #marketforecast #inflation #unemployment

So rates remain the same for now, as expected. Although there were specualtions (based on previous remarks) that we may see multiple interest rate cuts, this latest meeting didn't validate our hopes. Let's see if we get the rate reduction at the end of 2024 (From The Fed https://lnkd.in/grSiNzES ) Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been modest further progress toward the Committee's 2 percent inflation objective. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. #federalreserve #economy