The Federal Reserve announced its plans to hold interest rates steady during its latest policy meeting. However, the Fed did message that a rate cut could be on the table as soon as September. Yahoo Finance spoke with industry experts to break down the decision and what it means for the economy.We are about eight minutes away from Fed chair Jay Powell, taking to the podium for a press conference, talking to investors and to the media.
Well, that's a really tough question because um the, the chair can do a variety of things with the Jackson Hole speech. And certainly, you know, to cut rates at this point in the cycle, you know, is going to be seen as such. But I am curious what these guys are hearing in their districts and what, how they're taking that into account in terms of the decision making the district process uh over the years.
I'm curious how you're thinking about, you know, really, I guess the location of our star at this point. He was asked by someone if 50 basis points, a half point cut was on the table and he says we haven't been thinking about that at all.So I thought that was interesting and talked a lot about normalization of the labor market that he is not that concerned, doesn't seem that concerned about it falling off a cliff.I mean, there's, you know, plenty to parts out here um over the next couple of days.
Whereas before they saw more risk to the inflation side, they say quote, the outlook is uncertain and the committee is attentive to the risks to both sides of it to mandate though officials maintain key language in that statement that they have held since January that quote, the committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving the same towards 2%.
Um I think that gives the fed plenty of wiggle room with uh the July, you know, coming next month CP I report and then the August CPR report coming in September ahead of the Fed's next meeting. They, this signals to me that there's a lot of room between now and September where things could change and they do not want to tie their hands.If we're seeing better data that come in line with what they want to see by the time we get to Jackson Hole, then that chair P can really lay the ground work.Uh, as we get through the press conference here, we'll hear from you on the other side, bring us more, uh, on the fed and everything else happening in markets.
So we haven't seen rates really come down as much as you might expect when it comes to long dated treasuries. I mean, it'll be really long and variable lags because of that cushioning effect you're talking about. And I guess it would track then that, you know, you go from, um, you know, rates at zero, you raise rates, most aggressive we've seen in 40 years.And it feels like when you look, take a step back, you know, the fed is in a much more precarious position over the next several years, then maybe the market's focus on, you know, mid September this year might, might otherwise suggest.
They yes, they were rallying before but we saw them build on those gains after the statement and the press conference.I think Julie, when you look at how the markets tended to respond to the FED comments in the past, it's always tended to hear what it wants to hear. So then, and maybe taking a step back from um just what we heard in the last hour or so and looking at the market behavior really over the last couple of months in this rotation we saw in July, I think investors um trying to figure out what the next leg of this trade is, whether it's an A I trade, whether it's a Fed related trade.
And we're seeing it in both public markets and in private markets as something you just touched on, which is the A I trade. Coming out of the central bank's two day policy meeting in July but fed chair Jay Powell's Dovish comments signaling the central bank could cut rates at its next meeting. When you take a look at some of the softening that we have seen in the labor market, you have jobless claims rising to the highest level that we've seen in almost a year.Are they paying enough attention to, are they closely watching enough some of the deterioration that we are seeing in the labor market?
So you could see a little bit more, uh, uptick, I think what was unusual about unemployment was that it was below 4% for such a long time.So it's all about normalizing on the labor market side.And so they're certainly, uh, you know, paying more attention to it.But I, I don't think right now that they're in bad shape at all, the, the unemployment rate is still low by historical standards in the US.
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