07/31/2024
Good News from the FED coming?
Jerome H. Powell, the chair of the Federal Reserve, speaks following the central bank’s decision to hold interest rates steady.CreditCredit...Al Drago for The New York Times
Pinned
Jeanna Smialek
Updated
July 31, 2024, 2:20 p.m. ET17 minutes ago
Jeanna Smialek
Fed statement opens door to rate cut.
Federal Reserve officials left interest rates unchanged at their July meeting, as economists had expected, and hinted that recent progress in lowering inflation could enable them to cut interest rates soon.
The Fed decided on Wednesday to hold interest rates steady at about 5.3 percent — a two-decade high where they have remained for a year now.
Notably, though, officials also tweaked their post-meeting policy statement to call price increases only “somewhat elevated” and to underscore that officials are attentive not just to the risk of lingering inflation but also to the threat of a job market slowdown.
Central bankers did not release a fresh set of quarterly economic projections at this meeting. Jerome H. Powell, the Fed’s chair, will deliver a news conference, which is scheduled to start at 2:30 p.m.
The Fed’s decision leaves all eyes on Sept. 18, when policymakers will next vote on interest rates. Investors widely expect them to cut borrowing costs at that gathering, and then to cut rates a second and even third time before the end of the year.
The Fed’s statement on Wednesday is likely to reinforce expectations for a coming rate reduction, because officials used it to stress both that inflation is cooling and that they are increasingly focusing on the health of the labor market. “The economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate,” the Fed said in its statement, replacing previous language that said the Fed was “highly attentive to inflation risks.”
As of their June economic projections, Fed forecasts implied that central bankers could cut roughly every other meeting once they got started. That would lower rates to 4.1 percent by the end of next year and 3.1 percent by the end of 2026.
Fed officials will release their next set of economic projections after their September meeting, which will give a hint at whether they still think that pace of rate cuts is appropriate.
Jeanna Smialek
July 31, 2024, 2:35 p.m. ET2 minutes ago
Jeanna Smialek
“The second quarter’s inflation readings have added to our confidence” that inflation is coming down sustainably, Powell says, a line that clearly keeps the door open to an upcoming rate cut without going so far as to specify a month for the move.
Jeanna Smialek
July 31, 2024, 2:34 p.m. ET3 minutes ago
Jeanna Smialek
“High inflation imposes significant hardship as it erodes purchasing power,” Powell reiterates. He often reinforces that the Fed knows how much inflation hurts normal people, especially those with limited wiggle room in their budgets.
Advertisement
SKIP ADVERTISEMENT
Jeanna Smialek
July 31, 2024, 2:33 p.m. ET4 minutes ago
Jeanna Smialek
“Conditions in the labor market have returned to about where they stood on the eve of the pandemic, strong, but not overheated,” Powell says today. That’s the sweet spot for the Fed, which wants a solid but sustainable job situation.
Jim Tankersley
July 31, 2024, 2:33 p.m. ET4 minutes ago
Jim Tankersley
Powell sounds pretty optimistic about the economy at the start of the news conference, stressing improvements in areas like investment.
Alan Rappeport
July 31, 2024, 2:31 p.m. ET6 minutes ago
Alan Rappeport
Trump, speaking at an event hosted by Black journalists in Chicago, said that “inflation is absolutely destroying our country” and reiterated his complaints about housing affordability during the Biden administration years. It’s worth remembering that while Trump was very critical of Powell when he was president, he recently said that he would not try to remove him from the Fed before his term ends, though caveated that with "especially if I thought he was doing the right thing."
Jeanna Smialek
July 31, 2024, 2:30 p.m. ET6 minutes ago
Jeanna Smialek
Jerome Powell is starting his news conference.
Advertisement
SKIP ADVERTISEMENT
Alan Rappeport
July 31, 2024, 2:22 p.m. ET15 minutes ago
Alan Rappeport
Harris was clear at her rally last night in Atlanta that she was in no way declaring victory on inflation and acknowledged that prices are still too high. She pledged to pressure big pharma and corporate landlords on prices, and to crack down on hidden fees, saying: “On Day One, I will take on price gouging and bring down costs.”
Jim Tankersley
July 31, 2024, 2:13 p.m. ET24 minutes ago
Jim Tankersley
Powell will speak to reporters in about 20 minutes. His news conferences are always closely watched by markets, but this one feels particularly weighty. Many investors will be expecting a cut in September based on this Fed statement, and they’ll be looking for any signs from Powell to support or undercut those expectations.
Danielle Kaye
July 31, 2024, 2:13 p.m. ET24 minutes ago
Danielle Kaye
Stocks are holding steady as the Fed’s announcement reinforces investors’ confidence that interest rates will start to come down in September. The S&P 500 is up 1.6 percent, in line with its rise in late-morning trading.
Jeanna Smialek
July 31, 2024, 2:11 p.m. ET26 minutes ago
Jeanna Smialek
Omair Sharif, founder of Inflation Insights, writes that “this was a baby step on the way to a September rate cut.”
