Powell after the 50bps cut: key takeaways and panic-cut risk
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Summarizes Powell's press conference after the 50bps cut: strong economy, no preset path, meeting by meeting decisions. Notes 50bps cuts have often been read as panic cuts with weak market returns, but Powell worked to avoid that read.
Key claims
Fed cut rates by 50bps
Powell said the Fed is not on a preset course and 50bps should not be seen as the new pace
Historically 50bps cuts were perceived as panic cuts with negative returns in following months
🇺🇸BREAKING: Powell delivers bullish speech and press conference after the Fed cuts interest rates by 50bps.
Key Takeaways ⤵️
➤ Economy is strong overall
➤ Growing confidence that strength in labor market can be maintained
➤ Indicators suggest labor market is now less tight than just before pandemic
➤ Longer term inflation expectations appear well anchored
➤ Fed is not on any preset course
➤ Fed will go meeting by meeting on decisions
➤ The labor market is in solid condition, want to keep it there
➤ US economy is in good shape, we want to keep it there
➤ Can go quicker or slower, or pause, on rate cuts if it is appropriate
➤ No one should look at today and think this is the new pace
➤ We are not seeing rising layoffs from our business contacts
➤ Immigration is one of the things that has allowed unemployment rate to rise
Historically 50bps cuts have often been perceived as panic cuts (confirmation of recession) with negative market performance in months after the cuts.
However, Powell put in quite a bit of effort to prevent that today, painting a very favourable picture of the economy, despite the significant rate cut.
So: Uptober loading or are we still getting rekt?
Linking back to my pre-announcement coverage on this here too. ⤵️
x.com/zerokn0wledge_/status/1836291205279224178
Let's just hope "history" doesn't repeat. ⤵️
x.com/blackgokusei/status/1836476479498031406
Interesting fact lol
x.com/zerohedge/status/1836468804630524270