Episode summary
Instant Reaction: Jay Powell on the Fed Decision | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Tom Keene, Jonathan Ferro, Lisa Abramowicz · Guests: Jay Powell
Summary
Jerome Powell held rates steady at 4.25%-4.5% and signaled the Fed is in no rush to cut, arguing that there are still “many, many uncertainties” around tariffs, inflation and the labor market. The hosts and guests interpreted the message as a deliberate effort to preserve optionality into September rather than pre-commit to a rate cut after two dissenters voted for a quarter-point reduction.
The discussion centered on Powell’s view that the labor market is still “in balance,” with unemployment still near where it was a year ago even as payroll growth slows. Bill Dudley and Mike McKe stressed that the Fed is waiting for more evidence on how tariffs filter into prices and expectations, while Jeff Rosenberg said the committee is balancing inflation risk against labor-market downside risk and is not yet ready to declare the tariff shock transitory.
Market reaction was immediate: Treasuries sold off, the dollar strengthened and stocks slipped as traders pared back September cut odds. The panel also linked Powell’s stance to broader tensions over White House pressure, tariff policy and a labor market that may be stable on the surface but still showing growing downside risks underneath.
Key takeaways
- Powell said the Fed is not close to ending its wait-and-see stance because tariff, inflation and labor-market uncertainty remain elevated.
- Bill Dudley argued the Fed should wait because labor demand and labor supply are both slowing, keeping unemployment deceptively stable.
- Mike McKe said Powell preserved optionality for September and shifted attention to Friday’s jobs report, especially the unemployment rate.
- Jeff Rosenberg said the key issue is the balance of risks: if inflation stays sticky and unemployment does not deteriorate, cuts will be hard to justify.
- Markets interpreted the press conference as hawkish, with bonds weaker, the dollar stronger and stocks lower after the decision.
Notable quotes
“If you look at the labor market, what you see is by many, many statistics, the labor market is kind of still in balance”
“the totality of the data show you've got a solid labor market. And two, inflation is further from our goal than employment”
“I think they have to wait because they're not really sure uh what's what's going to happen to the economy both on the on the inflation side and the labor market side”
“Optionality maintained. I mean, that was basically uh J Pal's goal”
How the episode opens
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Bloomberg audio studios podcasts radio news. — The chairman of the Federal Reserve. His words, this was one of the better meetings that I can recall. Maybe you had to be there. In the equity market, we look like this. Equities shaping up as follows. Down by about 210 of 1% on the S&P 500 on the Nasdaq positive by 0.04.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed decision
- interest rate futures
- treasury yields
- us dollar
- s&p 500
Watch the episode
Watch “Instant Reaction: Jay Powell on the Fed Decision | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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