A review of the Fed Chair comments during his press conference by topic

<p>Economic Growth and Outlook</p><ul><li>Progress: Acknowledges significant progress in the economy.</li><li>Uncertainty: Highlights the uncertain path forward and notes the economy is broadly normalizing, driven by post-pandemic healing and labor market recovery.</li><li>Subdued Activity: Points out subdued activity in the housing sector despite overall economic growth.</li></ul><p>Inflation</p><ul><li>Easing Yet Above Target: Inflation has eased notably but still remains above the 2% target. Low inflation readings in the latter half of the year are welcomed, yet continuous evidence is needed for confidence in returning to the target.</li><li>Continuous Monitoring: Stresses the need for greater confidence and more evidence that inflation is on a sustainable path back to 2%.</li></ul><p>Monetary Policy and Rate Decisions</p><ul><li>Tightening Over Past Two Years: Monetary policy has significantly tightened to combat inflation.</li><li>Policy Rate at Peak: Suggests the policy rate is likely at its peak, indicating a shift towards potentially reducing rates if the economy evolves as anticipated.</li><li>March Rate Cut Unlikely: Explicitly mentions that based on the current meeting and economic data, a rate cut in March is not the base case, emphasizing a cautious approach.</li></ul><p>Employment and Labor Market</p><ul><li>Tight Labor Market: The labor market remains tight with strong job gains and labor demand exceeding supply, suggesting robust employment health.</li><li>Wage Normalization: Indicates wage normalization and labor rebalancing are ongoing processes, expected to take time to fully stabilize.</li></ul><p>Balance Sheet Reduction</p><ul><li>Successful Runoff: Notes the balance sheet runoff has been proceeding well, with plans for more in-depth discussions on its pace in future meetings.</li></ul><p>Rate Cuts and Policy Adjustments Outlook</p><ul><li>Future Adjustments: While open to reducing rates sometime this year, emphasizes the need for more data to ensure inflation is moving sustainably down.</li><li>Risk Management: Describes being in a risk-management mode, carefully weighing the timing of any policy adjustments to avoid derailing inflation progress or harming the economy.</li></ul><p>Additional Insights</p><ul><li>Anecdotal Evidence: Expresses value in anecdotal data, observing that activity is picking up marginally.</li><li>Economic and Inflation Confidence: Though there is growing confidence in inflation data, stresses the importance of ensuring that inflation reduction is done in a sustainable manner.</li></ul><p>Looking at the markets:</p><p>Stocks before rate decision and current levels: </p><ul><li>Dow was up 17.23 . Now down -305 points or 0.79%</li><li>S&amp;P was down -34.54 points and is now down -74.37 points or -1.51%</li><li>Nasdaq was down -185.70 points and is now down -321.65 points or -2.08%.. The decline is the largest since October 26 when prices fell -1.98%</li></ul><p>US yields before and after:</p><ul><li>2 year yield moved from 4.249% to 4.276% currently</li><li>5-year yield moved from 3.887% to 3.909% currently</li><li>10 year moved from 3.965% to 3.986% currently</li><li>30-year yield moved from 4.2119% to 4.229% currently</li></ul><p>Currency pair technicals:</p><p>EURUSD:</p><p>USDJPY:</p><p>GBPUSD:</p>

This article was written by Greg Michalowski at www.forexlive.com.