Special Fed Coverage: Powell Press Conference
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What is the main topic discussed in this episode?
With this special edition of Your Money Briefing, I'm J.R. Whalen at The Wall Street Journal in New York.
What did the Fed announce about the new interest rate range?
The Federal Reserve on Wednesday said it will raise short-term interest rates by another quarter percentage point, and Fed officials signaled they want to continue lifting them through next year to keep a strong economy on an even keel. We're joined by Brett Ewing. He's Chief Market Strategist of First Franklin Financial. So, Brett, the Federal Reserve Chairman Jerome Powell said that the Fed really does walk a tightrope and
How does Chair Powell describe the Fed’s 'tightrope' between raising rates and slowing growth?
determining whether to raise rates and how quickly to raise them.
The question is, what would the economy look like if you didn't raise rates? It would look very different, I think, if you didn't raise rates. We're always trying to, you know, work our way between sort of the two problems we face. One is that if we move too quickly, We can, you know, snuff out a recovery unnecessarily, and inflation falls short of its 2 percent target. Or if we move too slowly, we have an economy that can overheat. So we're-that's happened through history.
Which indicators is the Fed monitoring to decide on future rate hikes?
We don't see any signs of that now, but we're always trying to navigate between those two shoals.
But with the Fed looking to raise rates several times next year in addition to December, they're looking for a lot of continued growth in the economy.
I really liked one of the comments that came out of Chairman Powell about that they are paying attention to emerging markets because it is important and it does affect the global growth story. Another area that I think that the Fed is really paying attention to is the dollar, the dollar and the equity markets. We feel as long as the equity markets are are staying strong and holding up well here in the U.S. and the dollar is somewhat stable, that that's going to give a green light to the Fed to continue with their gradual rate hikes, you know, I think three to four next year if that were the case. And I think it would be warranted considering the economic conditions stay the same.
The Fed has a lot to work with here. They're dealing with consumer spending.
Why did the Fed drop the word 'accommodative' and what does that signal?
They're dealing with inflation. They're dealing with unemployment. So it is a multifaceted way for them to observe all the gears of a watch, if you will, of the economy. They kind of have to do that on a daily basis.
How could trade tensions and tariffs affect Fed policy and the US economy?
The employment situation in the country is kind of making it easy for them. So we're getting close to that full employment. Many believe we're obviously there. But We probably will get a little tighter in the unemployment numbers before year-end. And if you look at the jobless claims, they're at lows. Four-week moving average is at lows going back to the late 1960s. I mean, these are some unprecedented numbers that we're getting out of the jobs numbers right now.
What risks and opportunities do emerging and international markets present?
One of the things that was significant coming out of the Fed's statement on Wednesday was they dropped the word accommodative. It means that they are more or less pressing on the gas pedal to help stimulate growth in the economy. And, you know, history will show that they have to really be careful how quickly or how strongly they do this for fear of overheating the economy.
Here at our firm, we always feel that when you're in the end of a rate cycle, that is the Federal Reserve is one of the biggest risks we think to the economy. and that they could overshoot or misinterpret the data, if you will. But so far, we believe that the Fed is on the right course. We believe the rate hikes are warranted. The market is accepting the rate hikes that are expected here in December so far, and we think that'll go through. It does change as the data changes, but again, we feel that if equity markets are up and the dollar is stable, that we would have continued gradual rate hikes going forward.
Well, while the U.S.
How are markets reacting and what is the outlook for continued rate increases?
economy is in very good shape, there are things on the Fed's radar that have them very wary. And we'll discuss that with Brett Ewing in just a moment.
We're speaking with Brett Ewing, chief market strategist of First Franklin Financial. So, Brett, Powell seemed to be very concerned about not only the implementation of tariffs, as we have seen on Chinese goods this week, and the signs that we could have an all-out trade war.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:05–0:10
2
What did the Fed announce about the new interest rate range?
0:10–0:32
3
How does Chair Powell describe the Fed’s 'tightrope' between raising rates and slowing growth?
0:32–1:01
4
Which indicators is the Fed monitoring to decide on future rate hikes?
1:01–2:02
5
Why did the Fed drop the word 'accommodative' and what does that signal?
2:02–2:16
6
How could trade tensions and tariffs affect Fed policy and the US economy?
2:16–2:47
7
What risks and opportunities do emerging and international markets present?
2:47–3:48
8
How are markets reacting and what is the outlook for continued rate increases?
3:48–7:14
Speakers
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