Episode summary
Instant Reaction: Jay Powell on the Fed Decision | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · Hosts: Tom Keene, Jonathan Ferro, Carol Massar, Tim Stenovec
Summary
The Fed left the benchmark federal funds rate unchanged at 3.5%-3.75% after a 10-2 vote, with Governors Christopher Waller and Stephen Miran dissenting for a quarter-point cut. Powell signaled a more cautious stance, saying the committee still sees tension between employment and inflation but less than before and that both upside inflation risks and downside labor risks have diminished. The host and guests read that as a pause that could last well into the year rather than the start of a fresh easing cycle.
Several guests argued that this may be the last cut under Powell, with the bond market already pricing no real move toward a cut over the next six months. They said Powell avoided politics, including questions about the dollar and the Trump administration, and focused instead on policy and the data. One guest said Waller’s dissent looked like a legitimate policy position, while Miran’s was tied more closely to the president’s preference for lower rates.
The discussion kept returning to a stronger economy, supported by AI-led capex, a wealth effect in equities, and consumer spending that remains solid. At the same time, guests warned that goods inflation could stay sticky early in the year and that the next Fed chair could face inflation near 3% with limited room to cut.
Key takeaways
- The Fed held rates at 3.5%-3.75% in a 10-2 vote, with Waller and Miran dissenting for a cut.
- The guests said Powell sounded like a chairman with little appetite for more cuts before he leaves office.
- Bond markets are already pricing no real rate cuts over the next six months, according to one guest.
- AI spending and the wealth effect are helping consumption, but that same dynamic can widen the K-shaped economy.
- Guests expect sticky goods inflation early in the year, with the next chair likely facing inflation around 3%.
Notable quotes
“committee pretty broadly for for for holding today. We still have some tension between employment and inflation but it's less than it was”
“I think that the upside risks to inflation and the downside risks to risks have probably both diminished a bit”
“there's no more cuts under Chair Powell. He's done. And he's I think that's right”
“the bond market has the pricing right that, you know, then in the next six months, there's really no real movement towards a cut”
“it's really about the micro and the micro is the AI and the technology story, the concentration and it's flowing through from the micro to the macro through the wealth effect”
How the episode opens
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The beginning of a walk into the sunset for the chairman of the Federal Reserve. Jay Powell only has two more of these meetings on the calendar. As the chairman of the world's most important central bank for the equity market on the S&P 500, still close to all-time highs on the S&P.
on the NASDAQ 100 up by 0.5 in the bond market.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed decision
- interest rates
- federal funds target
- fomc vote
- economic outlook
Watch the episode
Watch “Instant Reaction: Jay Powell on the Fed Decision | Bloomberg Businessweek” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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