Staying in Neutral Gear
Mid-Week Thoughts
Yesterday’s key headlines…
*FED HOLDS BENCHMARK RATE IN 4.25%4.5% TARGET RANGE
*FED SAYS UNCERTAINTY ABOUT OUTLOOK HAS 'INCREASED FURTHER'
*FED: RISKS OF HIGHER UNEMPLOYMENT, HIGHER INFLATION HAVE RISEN
*FED REPEATS INFLATION 'REMAINS SOMEWHAT ELEVATED'
*POWELL: UNUSUAL SWING IN TRADE COMPLICATED GDP MEASUREMENT
*POWELL: INDICATORS SUGGEST LABOR MARKET BROADLY IN BALANCE
*POWELL: SURVEYS SUGGEST TARIFFS DRIVING INFLATION EXPECTATIONS
*POWELL: FED MAY FIND ITS DUAL MANDATE GOALS IN TENSION
*POWELL: WHEN THINGS DEVELOP, WE CAN MOVE QUICKLY AS APPROPRIATE
*POWELL: DON'T THINK WE NEED TO BE IN A HURRY TO ADJUST RATES
Fed Maintains Status Quo
The Fed meeting came and went, a bit of a nothingburger, exactly as anticipated. Rates remain unchanged in the 4.25-4.5% range, and Powell continues to advocate his wait-and-see approach, emphasising data-dependence amid rising uncertainty around trade and economic conditions.
Despite highlighting increased risks of stagflation, Powell signalled continued comfort in the Fed's current "moderately restrictive" policy stance, effectively side-lining any imminent rate adjustments until further clarity emerges.
The market's initial nervousness quickly faded, with equities rallying positively post-announcement. This reaffirms my previous view that