Episode summary
Instant Reaction: Jay Powell on the Fed Decision | Bloomberg Surveillance
Bloomberg Surveillance
· · 26 min · Hosts: Tom Keene, Jonathan Ferro, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Jerome Powell
Summary
The Fed left rates unchanged and kept the median projection pointing to one cut this year, but the discussion quickly shifted to whether the latest Middle East shock changes the policy path. The host and analysts argued that Powell’s press conference came across as more hawkish than the statement alone suggested, with front-end yields rising and equities selling off as he stressed uncertainty and said it was too soon to judge the full economic effects.
Powell’s emphasis was that the Fed needs more evidence of disinflation before resuming cuts, especially on goods inflation that has been boosted by tariffs. Several analysts said that the committee is now more cautious because inflation has already run above target for years and a new energy shock could keep price pressures elevated. The conversation also centered on Powell’s remarks about staying on as chair until a successor is confirmed and not leaving the board while the DOJ investigation is ongoing, which the analysts said adds legal and political uncertainty.
The market reaction, especially in the 2-year yield and rate-cut pricing, was treated as a signal that investors are rethinking how dovish the Fed can be if oil prices remain high.
Key takeaways
- Powell said the Fed needs to see clearer disinflation, especially in goods prices affected by tariffs, before cutting again.
- Analysts said the Middle East shock pushed the press conference from dovish to hawkish, with front-end yields and risk assets reacting immediately.
- The host noted that the median dot still showed one cut this year, but markets pushed out the first full cut much further.
- Analysts said Powell’s comments about staying on as chair until a successor is confirmed add legal and political uncertainty around Fed independence.
- Several guests argued that sustained higher oil prices would shift the debate from inflation to growth and demand destruction.
Notable quotes
“the chairman deemphasizing the projections, re-emphasizing the uncertainty, focused on the shock in the Middle East”
“I have no intention of leaving the board until the investigation is well and truly over with transparency and finality”
“we've got it. He is going to be the Fed chair until Kevin Worsh is in the seat”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.
The chairman of the Federal Reserve. If there was a good meeting to scrap the forecast, then this one was probably it. the chairman deemphasizing the projections, re-emphasizing the uncertainty, focused on the shock in the Middle East.
We had one question. How would they respond to it? Would they look through it?
The answer, it's not that simple. Equities in response negative. Nession lows right now, down 1% on the S&P 500.
Likewise on the NASDAQ. In the bond market, twos, tens, and 30s. Yields higher, particularly at the front end of the yield curve.
Up by seven basis points on a 2-year 375. If you like me thought this would be boring, this was not a snooze. The Federal Reserve chair asked about succession.
Take a listen to what he had to say.
If my successor is not confirmed by the end of my term as chair, I would serve as chair prom until he is confir confirmed. I have no intention of leaving the board until the investigation is well and truly over with transparency and finality. on the question of whether I will then continue to serve as a governor after my term ends and after the investigation is over. I have not made that decision yet.
Three points from the chairman of the Federal Reserve. Let's go through them individually. Point one, I will stay on as chair until a successor is confirmed. Point two, I have no intention of leaving the Fed while the DOJ investigation is ongoing. And point three, even after that is complete, I haven't made a decision on how long I'll stay on.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed decision
- interest rates
- rate cuts outlook
- inflation progress
- middle east uncertainty
Watch the episode
Watch “Instant Reaction: Jay Powell on the Fed Decision | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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