Central Bankers Can’t ‘Do Two Things At Once,’ Powell Said

Trump Slams the Fed for Not Cutting Rates Enough

29 minutes ago

President Donald Trump reiterated his criticisms of the Federal Reserve on Wednesday, saying that the Fed’s move today was insufficient.

Trump told reporters in the White House that the cut could have been at least twice as much as it was.

“We have to get a mindset that when a country is doing well, you don’t want to kill the growth,” Trump said. “That’s what they’re doing. They kill the growth.”

Trump has often pushed the Fed’s policy committee to lower interest rates sharply, criticizing Powell specifically for not doing so.

What Some Experts Are Saying About Today’s Meeting

1 hr 21 min ago

Jeff Schulze, ClearBridge Investments’ Head of Economic and Market Strategy

“The Fed’s one rate cut outlook continues to be at odds with pre-meeting futures market pricing of two rate cuts in 2026. While we agree with the Fed that the need for further monetary support is limited, we caution investors to put less weight than normal on the dots since a new Fed chair will be at the helm starting in May.”

Danielle Hale, Realtor.com’s Chief Economist

“The data were sufficient for a majority of the Committee to support a rate cut, but the vote highlighted the wide variety of perspectives on the appropriate policy decision. Since the October Fed meeting, economic data have begun to trickle out, but statistical agencies have not fully recovered from delays caused by the federal government shutdown that paused most data collection and production.”

Ryan Sweet, Chief Global Economist at Oxford Economics

“There’s a non-trivial risk that the central bank is misreading the economic tea leaves as it’s data-dependent rather than forward-looking. The revisions to the forecast question the need to cut now, other than they opted for an insurance cut. We expect the Fed will want to pause for a while to allow time to for this and prior cuts to feed through the economy.”

Stocks Rose After Fed Chair Powell’s Comments

1 hr 39 min ago

Major stock indexes rose Wednesday as Federal Reserve Chair Jerome Powell spoke after the central bank cut interest rates by a quarter-percentage point, as expected.

The blue-chip Dow Jones Industrial Average, benchmark S&P 500, and tech-heavy Nasdaq were up a respective 1.2%, 0.8%, and 0.5% as Powell addressed reporters. The indexes had been up 0.5%, up 0.1% and down 0.3%, respectively, after the Fed cut its key rate to a range of 3.5% to 3.75%

The S&P 500 was on pace to set a new all-time closing high, while the Dow was within 110 points of its own.

Follow along with live market reaction here.

-Aaron Rennie

Inflation’s Heat Has Been Caused by Tariffs, Powell Says

1 hr 46 min ago

While inflation is running hot, most of it is being caused by tariffs, Powell said Wednesday.

Inflation has been above the Federal Reserve’s goal of 2% annually since 2021. The Fed has made a lot of progress on its fight against inflation but it still hasn’t been able to achieve its goal. The most recent report on the Fed’s preferred measure of inflation showed inflation stayed hot in September.

“If you get away from tariffs, inflation is in the low [2%], right? So it’s really tariffs that are causing most of the inflation overshoot,” he said. “And we do think of those as likely in the current situation to be a one-time price increase. Our job is to make sure it is, and we will do that job.”

One reason that tariff inflation could be persistent is that companies had held off passing the extra costs to consumers but are now implementing price increases.

The Tension Between Inflation and Employment Is Obvious, Powell said

2 hr 6 min ago

Conversations among Fed officials were robust this month, and the dissents reflect the tension between the two sides of the Fed’s dual mandate, Powell said in a press conference following the committee’s decision.

The Fed is trying to balance the need to keep inflation low and employment high. However, while both continue to show weakness, only one problem can be addressed at a time through the manipulation of the fed funds rates.

“A very large number of participants agree that risks are to the upside for unemployment and to the upside for inflation, so what do you do?” Powell said. “You’ve got one tool. You can’t do two things at once.”

FOMC Also Decides to Buy Treasury Securities

2 hr 18 min ago

In their decision today, the committee also announced that it will begin purchasing Treasury bills.

The committee said it would buy $40 billion worth of Treasury securities in the first month, aiming to reinject some of the cash that was removed from the system while it was tightening its balance sheet this year.

Treasury bills are short-term loans to the government that mature within a year. The Fed’s buying of these Treasuries can make loans easier to obtain or put downward pressure on interest rates. Still, it is not intended to significantly influence the economy, according to Fed Chair Jerome Powell in his press conference.

Watch Jerome Powell’s Press Conference

2 hr 29 min ago

You can follow along with Fed Chair Jerome Powell’s press conference following today’s decision here.

‘Dot Plot’ Shows One Cut on the Books For Next Year

2 hr 37 min ago

The median expectation for future rate cuts remained unchanged from when projections were last released in September.

The median Fed official is penciling in one rate cut next year, which is more than traders expected before the meetings. However, that’s likely because of the disparate views among the committee.

Expectations for next year’s rates range from between 3.75% and 4% to as low as the range of 2% to 2.25%.

Federal Reserve’s expectations of next year’s fed funds rate vary.

Federal Reserve / Summary of Economic Projections

Today’s Vote Had the Most Dissents Since 2019

2 hr 51 min ago

A quarter of the Federal Reserve’s policy committee voted against today’s move to cut interest rates:

Fed Governor Stephen Miran once again voted against the cut because he wanted a larger half-point cut.Chicago Fed President Austan Goolsbee voted against the rate cut because he wanted to leave them unchanged.Kansas City Fed President Jeffrey Schmid also voted against the cut in favor of staying put. This was his second meeting in a row voting that way.

This is the second meeting in a row with dissenting votes and the most since September 2019. The Fed typically votes unanimously on interest rate moves. However, the lack of data and mounting uncertainty about the economy’s trajectory have divided the committee.

Fed Cuts Interest Rates For A Third Meeting In A Row

3 hr 3 min ago

As widely expected, the Federal Reserve’s divided policy committee voted to cut the central bank’s key interest rate by a quarter-point Wednesday.

The cut lowers the fed funds rate range to 3.5% to 3.75%, its lowest since November 2022, and prioritizes helping the job market over fighting inflation. Three of the 12 Federal Open Market Committee members dissented from the decision.

Read more about the decision here.

Traders Are Fairly Certain the Fed Will Cut Rates

3 hr 26 min ago

Traders are pricing in a 89% chance that the Fed will cut interest rates in Wednesday’s decision.

That’s according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. Traders are more sure about the cut than they were a month ago, when they were pricing in only a 62% chance of a cut.

They’re less sure about future cuts. Currently, traders are betting that the most likely scenario is the next cut won’t come until next June, followed by only one more in September.

Economic Projections May Not Shed As Much Light As Usual

3 hr 58 min ago

Fed officials will also make their leanings clear through their forecasts, where their individual views on where rates should be by year-end are represented as anonymous dots. 

Their most recent projections, released in September, showed the median Fed official was penciling in one more cut in 2026 and another in 2027.

Barclays Economist Marc Giannoni doesn’t expect a major change in the dot plot, which he wrote will “again reveal considerable disagreement” at the FOMC on whether lower rates are necessary. 

Bank of America economist Aditya Bhave expects the 2027 cut to get pulled forward to next year, with a median dot suggesting two cuts in 2026 and “an extended hold at 3.0%-3.25% thereafter.” 

What Happened at the Last Fed Meeting?

4 hr 48 min ago

In October’s meeting, the Fed’s policy committee voted to cut the fed funds rate by a quarter point to a range of 3.75% to 4%.

The most recent decision was not unanimous, with two Fed governors dissenting from the other 10 voters in opposite directions. Stephen Miran, President Donald Trump’s appointee to the Fed’s governing board, voted to lower rates more steeply, by half a percentage point, while Jeffrey Schmid, president of the Kansas City Fed, preferred to hold the rate steady.

The Fed also announced that it was halting its quantitative tightening program, which had been removing money from the financial system.

Fed officials made the interest rate move despite lacking crucial information about inflation and employment.

-Diccon Hyatt

The Divisions Could Trigger Dissents

5 hr 31 min ago

Disagreements may show up in Wednesday’s vote count, with analysts expecting dissents in both directions.

Fed Governor Stephen Miran voted for a larger 50 basis point cut at October’s meeting—and is expected to do so again. Miran, who is President Donald Trump’s latest Fed appointee, says rates are overly high and tamping down growth.

At least a couple of more FOMC officials may also vote against Wednesday’s action, though from the opposite direction. Kansas City Fed President Jeffrey Schmid dissented in October and favored keeping rates unchanged. A few other Fed officials seem to be leaning in that direction, but it’s unclear how many would vote against a rate cut.

Barclays Economist Marc Giannoni expects at least three dissents, which would be the most since September 2019. If a fourth FOMC official votes against the decision, it would be the largest dissent tally since October 1992, Giannoni wrote.

It’s also possible that the Fed, which tends to operate on consensus, ends up in closer alignment with the FOMC’s public vote even if the debate is heavy inside the room.

“The committee will try to present a united front amid the disagreements,” Oxford Economics’ Pearce wrote.

-Polo Rocha

What Is the Fed Expected to Do Today?

6 hr 6 min ago

The Federal Reserve is widely expected to cut its key interest rate Wednesday to give a boost to the faltering job market, despite concerns that lower borrowing costs could stoke inflation.

The 12 members of the central bank’s policy committee have been sharply divided over whether to cut rates to encourage spending and stabilize the faltering job market, or to keep them higher for longer to fight inflation that is still well above the Fed’s target of a 2% annual rate.

Recent data on the labor market has shown a hiring slowdown, giving the upper hand to those advocating for rate cuts. The Fed has a dual mandate from Congress to maintain price stability while preventing unemployment from rising excessively.

To read more about the pull between jobs and inflation, click here.

-Diccon Hyatt

What Happens At a Fed Meeting?

6 hr 49 min ago

The Federal Open Market Committee is the body that sets the fed funds rate for the Federal Reserve System, the United States’ central bank.

It holds eight regularly scheduled meetings each year, which are not open to the public. The Fed’s use of interest rates to influence the economy is called monetary policy.

The FOMC consists of 12 voting members: the seven board governors, the Federal Reserve Bank of New York president, and four other regional bank presidents who serve rotating one-year terms.

At each FOMC meeting, the committee members discuss economic and financial conditions and decide whether and how much to change the fed funds rate. The FOMC issues a public statement about its decision at 2 p.m. on Wednesday when the meeting concludes. The Fed chair, currently Jerome Powell, typically hosts a press conference afterward to explain the decision.

To read more about what goes on behind FOMC meetings’ closed doors, click here.

-Diccon Hyatt