Powell's lack of conviction about easy financial-market conditions raises eyebrows: 'He left his "A" game behind back in December'
The Federal Reserve on Wednesday approved a quarter-percentage-point hike in interest rates to a range of 4.5%-4.75%. That was the smallest rate hike in a year, and one that had been telegraphed by many Fed officials. In addition, the Fed’s statement left in language that it saw “ongoing increases in the target range” — which means more than one hike is still planned.
This was a fairly hawkish setup for Fed Chairman Jerome Powell’s press conference, which followed a half hour after the policy move was announced.Powell’s comments resulted in easier financial conditions, reflected in lower bond yields TMUBMUSD10Y , higher equity prices DJIA SPX and a weaker dollar DXY .Powell resists locking horns with the market Against the expectations of many, Powell did not repeat his previous concern about easy financial-market conditions.
Derek Holt, head of capital market economics at Scotiabank, said Powell’s answer “was far short of having much conviction in your own forecast, and markets seized on the moment.” A rate hike in March seems like a sure bet, but after that, all bets are off Powell’s comments at his presser led economists to believe that another quarter-point hike in March was a done deal.
Powell ducked a question about whether the Fed talked about the conditions that needed to be in place for a pause in rate hikes, saying that reporters should wait for the minutes of the meeting in three weeks. “Powell sounded decidedly less hawkish than he has in a long time,” said Aneta Markowska, economist at Jefferies, in an email.
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