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Fed Chair Powell says no need to rush interest-rate cuts

MacDailyNews

Nov 15

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Wall Street is expected to open lower on Friday, following U.S. Federal Reserve Chair Jerome Powell’s comments on interest rate cuts. Powell indicated that the Fed may take a cautious approach to future rate reductions, citing ongoing economic strength and persistent inflation. This news has led to a rise in bond yields and a decline in rate-sensitive stocks.

Reuters:
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U.S. Treasury yields rose broadly after Powell’s comments, while Wall Street’s main indexes closed lower.
Traders increased bets that the Fed will keep rates on hold at its December meeting – pricing in a 45% chance, compared with 14% a month ago, according to the CME FedWatch tool. They now expect only about 71 basis points of total easing by the end of 2025, per LSEG calculations.
A Commerce Department report showed retail sales rose 0.4% in October on a monthly basis, compared with estimates for a 0.3% rise, according to economists polled by Reuters.
Stocks of vaccine makers lost ground after the President-elect selected Robert F Kennedy Jr, who has spread misinformation on vaccines, to head the Department of Health and Human Services.
BioNTech dropped 3.7%, while Moderna, and Novavax fell more than 2% in premarket trading. Pfizer dipped 1.3%.
Megacap stocks also fell. Nvidia edged 1% lower, Apple dropped 0.9%, and Alphabet was down 0.4%.
Powell’s comments come after both consumer and producer prices data this week pointed to persistent inflation.

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MacDailyNews Take: On interest rates, Powell was way late to hike, then didn’t go nearly high enough, and then started cutting too early. Three strikes and you ought to be out.

In July 2023, the Fed stopped raising rates too soon. – MacDailyNews, July 2, 2024

As we wrote in February 2023, “When certain quarters, including the Fed, delude themselves and others that ‘inflation is transitory’ and waste at least a year before doing a mere portion of what is necessary* (interest rate hikes), the price will be paid for being delusional and late.”

‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021

Stop the misguided crusade against domestic energy production and profligate federal spending and inflation will be stopped dead in its tracks. It’s not difficult. – MacDailyNews, May 11, 2022

For new generations, sometimes tough lessons have to be retaught and learned the hard way. As we go through this, remember: It’s always darkest before the dawn. – MacDailyNews, July 14, 2022

Inflation is repudiation. — Calvin Coolidge

When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill… [which] comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan

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