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Banking conditions have improved; pause decision not yet made: Powell press conference

May 03, 2023 2:35 PM ETJPMBy: Liz Kiesche, SA News Editor87 Comments
Chairman Jerome Powell Holds A Press Conference At The Federal Reserve

Alex Wong/Getty Images News

"Conditions have broadly improved" in the banking sector since March, Federal Reserve Chair Jerome Powell said at his post-monetary decision press conference. He repeated that the system is "sound and resilient," but also vowed to strengthen the financial system.


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Comments (87)

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"Banking is sound and resilient."
"Inflation is transitory"
I watched the press conference through CNBC streaming. Powell seemed forthright answering questions. The question and answer I waited to hear and did not is what criteria would be used to justify a pivot. It would seem that maintaining 5% through 2% inflation would then overshoot the mark in the subsequent months. He seemed to indicate that he expected no lowering of the prime rate through this year. He also said more than once his belief a recession is possible, but not assured, and that if there was a recession it would be short and mild. That is a bit different from the SA editor's readout.
Oil Can profile picture

J. Powell is smoking crack. Every decision he and the Fed made was either wrong - or a day late and dollar short. Good luck with your belief that things will only get 'slightly ugly'...
Winnertakesall profile picture
Powell made a huge mistake... he should have cut.
@Winnertakesall Stop living outside your means. The only mistake he made is not accelerating QT.
@Winnertakesall Yes, J. Powell and the Fed have been late to the game this entire rate cycle. They should just quit talking so much!
huraibin profile picture
Darren McCammon profile picture
Today Powell stated, "...the US banking system is sound and resilient..."
Meanwhile, PacWest Bank (PACW) is down 56% after hours.
In opposite world I guess sound and resilient means what strained and friable used to.
@Darren McCammon If it was a good bank, it wouldn't be in that position to begin with.
@Nissanfan The bigger picture is the fairly sudden de-Californiaization of America which is hitting all Western banks hard.
"The Fed chief stressed the importance of getting inflation down to its 2% goal, and he won't be satisfied until it gets there. "We're not looking to get to 3% and drop our tools," he said."

I thought that was the more interesting comment. In the past others have suggested they'd keep saying 2%, but settle for 3%-4%.

My crystal ball says 1 or 2 more hikes, then a pause things start truly breaking. Near term bottom for stocks in Oct./Nov.

Granted, I'm still dripping dividends and DCAing in my 401K, but have a good bit of dry powder burning a hole in my pocket...
Larry Hall profile picture
@Trout L I also hope Powell doesn't drop his tools. But I think he needs a new tool set.
Dividend Seeker profile picture
It has been nice to earn 5% in savings accounts. Been a long time since that happened, and it has been a welcomed way to de-risk my portfolio.
@Dividend Seeker yet look how many are disappointed. It just shows how many cannot save/make money without FED's pacifier.
ckarabin profile picture
They will not raise rates again, they just need some data justification for it. If we get 1 or 2 bad jobs reports, or the shelter component of the CPI finally catches up with reality and slows the index, that's all he needs. I think he'll get it. So I think rate hikes are over now.

I think he's a little too optimistic on the unemployment rate and recession. Both will be worse than his optimistic forecasts.
jakefountain profile picture
@ckarabin Says the guy who said 1/2 a couple of raises ago when everyone said 1/4.
Dark Samus profile picture
@jakefountain ooooh what a big deal
3carmonte profile picture
Every other article I'm reading from the media is saying that a "pause in the future is implied". Horse hockey. Powel was uncommitted and re-iterated his typical "that will be data-driven" platitude. He's not placating anyone that I can tell.
@3carmonte More importantly, he is sticking to the 2% target.
ckarabin profile picture
@3carmonte He'll get good data now, starting with Friday's jobs report
@ckarabin He and the Fed seem to love working with data that is at least +6 months old....
Worst decision is no decision at all. JPow has screwed up another one.
@asm12345 Is inflation at 2%?
Larry Hall profile picture
@Nissanfan Inflation has been dropping rapidly.. nobody knows the actual percent - whose inflation where? We do know that the continued hikes have put wrenches in many companies' plans. It is also thoroughly unclear to me why 2% is some sort of holy number.
jPOW knows how to stick it to us!
ckarabin profile picture
@New Adams What do you think he is doing wrong?
Anthonyhai2003 profile picture
The banking sector won't know for sure about the future, if the Feds continued its meh attitude.
How could the banking conditions have improved? With the inverted yield curves, the tightening lending conditions, the higher overnight Fed rate, and the weakening labor market, most small to medium banks are just zombies.
ckarabin profile picture
@ithinking He means nobody has filed chapter 11 for several days now!
@ithinking Curve is uninverting quite noticeably except for very short end. 2's to 30's now flat.
To control inflation they need 10% not the current cosmetic 5%.
@ckbn - funny ha ha lol
@ckbn Agreed.
ckarabin profile picture
@ckbn We would have a recession like the 2008 version.
Herbert 5223 profile picture
From my experience, inflation has almost no chance of decreasing to 2% with the FF rate at 5 to 5.5% because too many other factors have changed. The war in Ukraine is one example. I am guessing that a few of the PHD economists on the FOMC or on the staff know this also and don’t want to rock the boat at this time. As a result, this tightening phase is probably just round 1 in a 3 or 3 round bout.
3carmonte profile picture
@Herbert 5223 As dad used to say "If it won't break, use a bigger hammer".
@Herbert 5223 agreed. A realistic long term (5-10 year) inflation rate is 4-5% assuming no f ups down the road.
oops, no pivot, again
Doctor_ECE_Prof profile picture
Let in sink in all the dreamers, "There was some talk of a pause, but not for this meeting"
The dictionary will say PAUSE is not same as CUT. If they have to cut the rates, then it means the economy has moved from hot pan to a boiling water, either one is a companion for bulls :)
Diesel profile picture
After JPow clearly said "no we won't cut rates anytime soon" markets are down a whole -0.1% fully pricing this in.
mpcascio profile picture
He's a fool. he and Yellen are a pair that beats a full house.
FirstFIREWealth profile picture
Only way I vote Trump 2024 if he can admit to us he made a mistake nominating this Fed joker and will fire his S on day 1.
ContyC profile picture
@FirstFIREWealth His mistake was when he pressured Powell to cut rates. Now Powell is finally doing his job right.

PACW might not last through the upcoming weekend.......................
@danny6 Good another blown up child of stupid QE.
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