![]() The US economy remains resilient for now, but events such as the Israel-Hamas war and broader uncertainty - both globally and domestically - present "plenty of risk," Federal Reserve Chair Jerome Powell said Wednesday. The US Capitol in Washington, DC, on October 9. The idea of a future interest rate cut doesn't come up in meetings right now, Powell said.Īfter the Fed is confident that it has successfully tamped down inflation, Powell said the committee will then have to deliberate how long to keep interest rates elevated before they begin considering rate cuts. "We are still very focused on the first question, which is, have we achieved a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time," he said. Kevin Dietsch/Getty ImagesĮven though the Federal Reserve chose to hold off on an interest rate hike for the second straight month, Fed Chair Jerome Powell dashed any hopes for a rate cut in the near future.Īt the Fed's post-meeting press conference, Powell said the Fed's monetary policy committee "is not thinking about rate cuts right now at all." ![]() "I do think it is fair to say as we go forward, as monetary policy becomes more important relative to supply-side issues I talked about in the unwinding of the pandemic effects, it may be that the labor market becomes more important over time, too."įederal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on November 1 at the Federal Reserve in Washington, DC. "In my thinking, it's not the case that wages have been the principal driver of inflation so far," he said. Still, wage growth is running at a quicker pace than it did pre-pandemic (from 2015 to 2019, BLS data shows the ECI with an average growth rate of 2.47%). "So, in a way, it was validating and very close to our expectations internally, too." "If you look back a couple of quarters, it was much higher, came down substantially in June, and then the September reading was more level than the June reading," Powell said. The latest ECI rose 4.3% on a year-over-year basis, which was down from 4.5% the quarter before and 4.8% in the first quarter. That's up a touch from the second quarter's 1% growth rate.Īnnually, however, there's a much clearer picture of slowing wage gains. "Wage increases have really come down significantly over the course of the last 18 months, where they are substantially closer to a level that would be consistent with 2% inflation over time," Powell said, noting that a variety of gauges have shown similar trends.ĭata released earlier this week showed that the Employment Cost Index, a closely watched measurement of pay and benefits, rose 1.1% during the third quarter from the quarter before, according to the Bureau of Labor Statistics. Michael Nagle/Bloomberg/Getty Imagesįederal Reserve Chair Jerome Powell said Wednesday he likes what he's seeing on the wage growth front: a steady and gradual easing. WeWork plummeted by more than 47% as reports of a possibly imminent bankruptcy broke.Ĭommuters at the Hoboken Terminal in Hoboken, New Jersey, on Oct. Shares of CVS dropped 0.4% even after the health care company reported an earnings beat. In corporate news, shares of semiconductor company AMD closed 9.7% higher after the company reported strong third-quarter earnings results. ![]() Treasury yields, meanwhile, slumped to 4.76% on the Fed news. In a note to investors, Whitney Watson global co-head and co-chief investment officer of fixed income at Goldman Sachs Asset Management wrote that "the economy’s resilience has not stalled labor market rebalancing or revived wage and price pressures, suggesting disinflation will progress and indicating that the Fed will likely keep its policy unchanged into 2024." The Federal Reserve said it would keep interest rates between 5.25% and 5.5%, and amended language in its post-meeting statement to say that “economic activity expanded at a strong pace in the third quarter.” Previously, Fed officials wrote that the economy had grown at a "solid pace."įed Chair Jerome Powell said that he would not rule out another rate hike at the Fed's next meeting in December, but Wall Street seemed to brush off the fear of more economically painful hikes. The tech-heavy Nasdaq Composite was 1.6% higher. The S&P 500 hit a session high, and was up 1.1%. The Dow rose by 221 points, or 0.7%, in Wednesday trading. US markets soared higher Wednesday, rebounding after a dismal October and three straight months of losses. Federal Reserve Board Chairman Jerome Powell answers a question at a press conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy at the Federal Reserve in Washington, today.
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