Fed recap: Breaking down the market's reaction to the Fed's pause and all of Powell’s key comments
CNBCJun 03, 2023
The Facts
Federal Reserve (Fed) Chair Jerome Powell announced Wednesday that the Federal Open Market Committee (FOMC) decided against raising the key interest rate for an 11th consecutive time, deciding to observe the economy at the current rate while signaling future hikes in 2023.
The FOMC released a unanimous policy statement at the end of a two-day meeting, saying that “holding the target (interest rate) range steady… allows the committee to assess additional information and its implications for monetary policy.”
The Spin
Establishment-critical narrative
The markets, just like the Fed itself, have no idea what's going on as the central bank continues its unsuccessful fight against inflation. Some may try to put a positive spin on the fact that rates aren’t increasing for the 11th consecutive time, but it's quite obvious that there isn’t a lot of progress in bringing down core inflation, and rate hikes are all-but guaranteed as soon as next month. There’s a lot of volatility, and the only certainty is that inflation will remain and the Fed will hike rates yet again.
Pro-establishment narrative
While we're not out of the woods in the battle against inflation, there are signs that the American economy is heading in the right direction. The Fed’s decision shows that inflation has slowed down enough to not need another rate hike and offers some breathing room to see the direction of inflation at the current rate. While inflation isn’t going down as fast as many would like it to, it is going down nonetheless, and that’s a reason to be optimistic.
