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1) https://www.marketwatch.com/article...lation-rates-today-c6b764c3?mod=mw_latestnews
Federal Reserve Chairman Jerome Powell acknowledged that progress in reducing inflation has stalled since the start of 2024. That has come hand in hand with stronger economic growth, enabling the central bank to hold interest rates at their current level for longer than previously expected, Powell said.
“Last year, rebounding supply supported U.S. growth in spending and also employment, alongside a considerable decline in inflation,” Powell said on Tuesday afternoon. “The more recent data show solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal.”
Bond yields ticked higher, as their prices fell. The yield on the 2-year U.S. Treasury note increased by 0.1 percentage point to 4.99%. The 10-year yield moved up a similar amount to 4.66%. That’s its highest yield since early November.
Stock indexes whipsawed during the speech, initially falling after Powell’s comments before bouncing back. The S&P 500 was nearly flat in afternoon trading.
Powell participated in a discussion with Bank of Canada Governor Tiff Macklem at the Wilson Center think tank in Washington, D.C. It was the Fed chairman’s first public remarks since early April when only January and February inflation figures had been published. Back then, Powell largely dismissed stalling progress on reducing inflation as bumps in the road and said he still expected the Fed to reduce interest rates this year.
Since then, March data released on April 10 made it three months in a row of hotter-than-expected inflation. Many economists and Wall Street strategists began to expect fewer cuts this year. Markets have reacted strongly, sending bond yields higher and stocks lower.
On Tuesday, Powell said that the past few months of inflation data have validated the Fed’s wait-and-see approach to reducing interest rates. Several policymakers have cited a need for greater confidence that inflation is sustainably falling toward the Fed’s 2% annual target.
“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said. “…If higher inflation does persist, we can maintain the current level of restriction for as long as needed.”
The headline and core consumer price indexes were both up 0.4% in March and 3.5% and 3.8% year over year, respectively, government data showed last Wednesday. The annual rate of inflation has been moving largely sideways for the past six months, after dropping for most of 2023.
The Fed has held its federal-funds rate target at a 5.25% to 5.5% range since July 2023. “We have significant space to ease should the labor market unexpectedly weaken,” Powell said on Tuesday. “Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy time to work and let the data and the evolving outlook guide us.”
Futures-market pricing on Tuesday implied a slim likelihood of a move in the target at the FOMC’s May and June meetings, followed by roughly even odds of a quarter-point cut in July.
The Bank of Canada held its target interest rate at 5% at its meeting last week. Macklem compared the Canadian economy’s trajectory with that of the U.S. and the implications for monetary policy.
“We’re looking at the same things and asking ourselves the same questions,” Macklem said. “I think we both need to feel confident that we’re clearly back on a path to 2% before it would be appropriate to reduce interest rates.”
The March consumer price index data released by Statistics Canada on Tuesday morning showed prices up 2.9% from a year earlier.
2)
Powell Says Inflation Progress Has Stalled, Rates Will Hold Steady for Longer
Last Updated: April 16, 2024 at 2:20 p.m. ET First Published: April 16, 2024 at 1:30 a.m. ETFederal Reserve Chairman Jerome Powell acknowledged that progress in reducing inflation has stalled since the start of 2024. That has come hand in hand with stronger economic growth, enabling the central bank to hold interest rates at their current level for longer than previously expected, Powell said.
“Last year, rebounding supply supported U.S. growth in spending and also employment, alongside a considerable decline in inflation,” Powell said on Tuesday afternoon. “The more recent data show solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal.”
Bond yields ticked higher, as their prices fell. The yield on the 2-year U.S. Treasury note increased by 0.1 percentage point to 4.99%. The 10-year yield moved up a similar amount to 4.66%. That’s its highest yield since early November.
Stock indexes whipsawed during the speech, initially falling after Powell’s comments before bouncing back. The S&P 500 was nearly flat in afternoon trading.
Powell participated in a discussion with Bank of Canada Governor Tiff Macklem at the Wilson Center think tank in Washington, D.C. It was the Fed chairman’s first public remarks since early April when only January and February inflation figures had been published. Back then, Powell largely dismissed stalling progress on reducing inflation as bumps in the road and said he still expected the Fed to reduce interest rates this year.
Since then, March data released on April 10 made it three months in a row of hotter-than-expected inflation. Many economists and Wall Street strategists began to expect fewer cuts this year. Markets have reacted strongly, sending bond yields higher and stocks lower.
On Tuesday, Powell said that the past few months of inflation data have validated the Fed’s wait-and-see approach to reducing interest rates. Several policymakers have cited a need for greater confidence that inflation is sustainably falling toward the Fed’s 2% annual target.
“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said. “…If higher inflation does persist, we can maintain the current level of restriction for as long as needed.”
The headline and core consumer price indexes were both up 0.4% in March and 3.5% and 3.8% year over year, respectively, government data showed last Wednesday. The annual rate of inflation has been moving largely sideways for the past six months, after dropping for most of 2023.
The Fed has held its federal-funds rate target at a 5.25% to 5.5% range since July 2023. “We have significant space to ease should the labor market unexpectedly weaken,” Powell said on Tuesday. “Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy time to work and let the data and the evolving outlook guide us.”
Futures-market pricing on Tuesday implied a slim likelihood of a move in the target at the FOMC’s May and June meetings, followed by roughly even odds of a quarter-point cut in July.
The Bank of Canada held its target interest rate at 5% at its meeting last week. Macklem compared the Canadian economy’s trajectory with that of the U.S. and the implications for monetary policy.
“We’re looking at the same things and asking ourselves the same questions,” Macklem said. “I think we both need to feel confident that we’re clearly back on a path to 2% before it would be appropriate to reduce interest rates.”
The March consumer price index data released by Statistics Canada on Tuesday morning showed prices up 2.9% from a year earlier.
2)
