As expected, central bankers left interest rate policy unchanged and removed the dovish bias from their press release. But there was undoubtedly more to come… The statement is much shorter and focuses solely on price stability. It offers no forward guidance and no longer reveals how members voted on the decision. However, the real surprise in terms of its hawkish tone lay in the dot plot. Nine of the 18…
The new Chairman of the Federal Reserve, Kevin Warsh, appears to favour giving greater weight to the Trimmed Mean PCE at the expense of the traditional Core PCE, which has been the benchmark indicator to date. The distinction is not insignificant. Whilst the Core PCE systematically excludes food and energy, the Trimmed Mean discards components with the most extreme price fluctuations, regardless of their category. A more surgical approach, in…
By Deborah Cunningham The ability of the new Chair, Kevin Warsh, to lead the Federal Reserve will depend on the market believing that he is not beholden to President Trump. Being sworn in at a ceremony held at the White House has not done him any favours. It was the first time since President Reagan swore in Alan Greenspan that the ceremony took place there rather than at the central…
Bankinter | The Department of Justice has closed its investigation into Jerome Powell over cost overruns in the renovation of the Fed’s headquarters. US Attorney Jeanine Pirro stated that, instead, she has asked the Fed’s internal oversight body — the Office of the Inspector General — to examine the cost overruns in the renovation of the central bank’s headquarters in Washington. With the review being transferred to the internal oversight…
Renta 4 | We have finally received confirmation from Trump that Kevin Warsh will replace Powell at the helm of the Fed starting next May, something that the market had already been anticipating since Thursday afternoon. For his confirmation, approval by the Senate Banking Committee and then by the Senate itself is required. We recall that Republican Tillis, of the Banking Committee, said he would not approve any candidate until…
Bankinter | The Fed kept its benchmark interest rates (Fed Funds) in the 3.50%/3.75% range, in line with expectations. They will let ‘the data speak for itself’. The decision was not unanimous, with two votes in favour of cutting -25bp (Miran and Waller). Powell highlighted the improvement in growth expectations to ‘solid’ from “moderate” in his previous statement in December and, with regard to the unemployment rate, showed ‘signs of…
Bankinter | The Fed cuts benchmark interest rates (Fed Funds) by a quarter of a point to 3.5%/3.75% as expected. The decision was not unanimous, with one vote in favour of cutting by 50bp (Miran) and two in favour of maintaining rates (Goolsbee and Schmid). They announced that from 12 December they will increase their balance sheet again by purchasing treasury bills, not as part of their monetary policy, but…
Link Securities | According to a survey of economists conducted by Reuters, the Federal Reserve (Fed) will cut its key interest rate by 25 basis points next week and do so again in December. A month ago, economists expected only one more cut this year. But the new forecast follows a recent shift in the expectations of Fed monetary policy makers, which now point to additional reductions. In this regard,…
Norbolsa | New statements from Fed members suggest that the prevailing position is to lower interest rates again in October, despite some members advocating caution due to uncertainty about inflation. From New York, Governor John Williams said he would be comfortable lowering interest rates again, considering that the downside risk to employment is dominant and may have slowed further, while the pressure of tariffs on prices is not as high…
Bankinter | The Fed meets expectations and keeps benchmark interest rates (Fed Funds) at 4.25%/4.50%. The decision was not unanimous, as two governors (Waller and Bowman) voted in favour of cutting rates by 25 basis points. A third governor was absent and did not vote (Kugler). This is the first meeting since 1993 with two dissenting votes. Bankinter analysis team’s view: The decision to keep rates unchanged makes sense in…