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Federal Reserve has more 'work to do', warns against complacency: Powell press conference

Feb. 01, 2023 2:36 PM ETBy: Liz Kiesche, SA News Editor131 Comments

Federal Reserve Chair Powell Holds Press Conference On Interest Rate Announcement

Drew Angerer

"We have more work to do" to bring down inflation after the central bank raised its rate by 25 basis points to 4.50%-4.75% Federal Reserve Chair Jerome Powell said in his post-monetary policy decision press conference.

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Comments (131)

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Philipsonh profile picture
What Powell does not state is that his own Govt is fighting him; How can inflation go down if the Govt keeps spending with no regard to the inflation it is causing ? Powell just wants to keep his job and will not criticize Govt. spending.
C
Not one mention of the inflationary $1.7 Trillion DEMS jammed thru after losing elections.

Raise it to 5.5% JP----DC won't stop wasting our money----and 4% tax-free bonds are looking sweet for a few mil. Red state bonds, of course.
P
Jay needs to stop and smell the roses.
v
@Phil Dumfee
I think he is, I’m sure he is aware of the lag effect
J
No talk of Balance Sheet reduction??
Does someone need a lesson in critical thinking?
T
@JRS5 It's on auto pilot. It's a given.
w
"That's emphasizing to financial markets that the central bank isn't planning on backing down from its policy tightening yet."
Markets emphatically aren't agreeing.
"I reject your reality, and substitute my own" -adam savage
b
complacency? what like only doing a 0.25 hike
M
Returning to 2% inflation on what base? A post pandemic baseline that went up 10+%? So, essentially locking in the increase? Unless you see a few sequential quarters of negative inflation, the job will be far from done
T
Michael Burry. He be mad tonight.
Larry Hall profile picture
@The Real Cavalier Mike will hang tough. He'll be on Slack with Jeremy Grantham. They'll figure out a plan.
T
@Larry Hall Well if the market has a good year it's time to put him in a closet with Nouriel Roubini.
P
@The Real Cavalier Listen to Roubini. Sell Everything. This is a head fake.
Larry Hall profile picture
The qualified optimism of Bulls has been rewarded. The Federal Reserve has acknowledged its partial victory over inflation. Jay always sounds tough - that's the schoolmaster's job. I believe the bearish hope that this is a short-term rally will be quashed.
TommyIrish profile picture
Yes indeed, price Change %: .

CVNA 33.33%
PTON 26.53%
SI 14.04%
TSP 13.33%
WE 13.21%
COIN 12.35%
HUT 11.2%
NLS 11.89%
W 9.93%
FUBO 9.73%
AFRM 9.45%
RIOT 9.41%

Bro Pow, got to work harder on the Dirty Dozen!

To Da Moon!
John McCoy profile picture
@TommyIrish Lots of short covering on that list.
TommyIrish profile picture
@John McCoy

Investing isn’t hard!

You just buy the worst of the worst and Bob’s your uncle!

NOT rocket science!
P
@TommyIrish Only Elon knows how to engineer a soft landing.
Clearly not enough work being made to properly complete the job. The markets have been going way too early and way too far to the opposite direction, and soon the "free" profits from some of the worse names in the Nasdaq and crypto will be spent in the real economy, so that demand for goods and services will again increase, just like in 2020-21, while supply shocks from war, bad domestic policies, plus that general trend to deglobalization, will persist in some way or the other. To me, the optimists have their feet far above the ground, inflation and further rate hikes will all be back, maybe even before 2024 starts.
is moving the Fed Funds rate around "work" to them??
B
Mr. Market still smoking high. Fed Powell said, "Not to worry, Mr. Market I got Naloxone for you, if you pass out." Sure, I think US govt should make Cannabis legal so they can get tax revenue to balance the budget. "Screw Debt Ceiling!"
The Fed will probably be able to reduce the leisure and hospitality portion of the labor shortage (+67,000 in January) through continued hammering at the economy with Powell's recession-inducing rates sledgehammer. He won't be able to do much about those fields that exist regardless of consumer wants, like healthcare and necessary construction activities just to keep the bridges from falling in the ravine or to fill in giant potholes.

The labor shortage and related wage inflation is mostly about the lopsided working and non-working generations we have today. It's not something the Fed will be able to ever fix. The large baby boom and Gen X generations produced fewer children per couple than prior generations. Abortion-on-demand and no/single child households don't really work well for the purposes of providing an adequate labor pool to support the retired and other members of non-working population or keep social security funded. About 50-60 million of those who would be working age adults today were aborted and immigration has not filled in the gap, nor can it, due to substandard educational systems in the countries most permanent migrants come from. They aren't any better able to fill high-skill jobs than the undereducated graduates of US public schools.

Gen Z also has a much lower labor force participation rate, which is mostly responsible for driving down overall US labor force participation from 66.5% in 2003 to 62.2% today. Cutting back on overly generous blue state social assistance, shortening unemployment benefits and cutting government subsidies for college degree programs not filling labor gaps would go a lot further towards fixing that problem and the resulting wage inflation than anything the Fed can do.
T
@Found.Alpha Gold star comment of the day. So much accurate information in a few words. Bravo.
Illuminati Investments profile picture
@The Real Cavalier "few words", reallly?

I'm still reading paragraph 2, article IV, section BB...
t
@Found.Alpha There is an economical reason gen z work force participation is lower, and it’s largely from student loans.
Same goes for millennials.
If they work to much higher payments kick in so for many of them they’re better off not earning more.
At some point there’s either going to be a reckoning or student loan forgiveness will become a real thing.
As far as birth rates go to support aging populations it’s not necessary, raising the caps temporarily to 400,000 would solve the problem, and after 2035 the boomers will be diminishing, and those programs will be solvent again.

Charlie stole the handle, and the train it won’t stop rolling no it couldn’t slow down.
J
Bearish. Even if rate hikes stall, why is nobody talking about the *massive balance sheet reduction that is still going on*,especially at rate that dwarfs the the balance sheet reduction attempt in the early 2018s. Still very hawkish.
b
@Julian Beatty because it has been replaces with reverse repo to hide it
v
J. Powell is looking for a soft landing and he might just pull it off!
Considering the circumstance with covid and all, I’d say mr Powell is doing a good job cooling things off.
If inflation keeps coming down in the next few months watch out below, this market will take off
In any eventuality I’m ready either way!
Code Talker Market Analysis profile picture
Me: Cautiously bullish, short term only.
Bearish possibility when lagging hikes and layoffs find their way into earnings reports.
How is a new bull market defined?
J
Complacency?
What me complacent?
Melt-up in progress!
Whoop whoop whoop!!!
T
I'm pleased with the reaction somewhat. I really don't want a return to the foolish momentum playing game of 2021. Lets tamp things down a little. Slow and steady wins the race.
Stefan Redlich profile picture
Why is the dollar falling so hard against the euro? I don't get why it is at 1.10 EUR/USD if interest rates in USA are much higher and economy is also stronger in the US... anyway
Get Rich Brothers profile picture
@Stefan Redlich Perhaps an FX play there to be made.

I do still have a few Euros (and Swiss Francs) left from vacation in August.
N
@Stefan Redlich
ECB wants to rise further and said they gonna hike 0.5 in march too.
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