Fed Chair Powell faces questions about rate cut, inflation and Trump

Fed Chairman Jerome Powell said he is not worried about the economy despite an inflation report coming in “a little higher than expected.”

“Overall, (we) feel good about economic activity,” he said. “At the same time, we got an inflation report… It wasn’t terrible, but it was a little higher than expected.”

“In December we will have more data, I guess one more employers report, two more inflation reports and lots of other data and we will make a decision when we get to December,” Powell continued.

—Sean Conlon

Now is an opportune time for the Federal Reserve to take a step back from its rate-cutting campaign, according to Byron Anderson, head of fixed income at Laffer Tengler Investments.

“Without a credit crunch emerging, which is not evident at the moment, the greater risk to the markets adds stimulus to an already inflationary skewed environment,” he said. “Many will disagree, but this was the perfect point for the Fed to pause and reassess the landscape through the end of the year.”

“If you think the economy is on good footing, the risk of inflation increases with every rate cut they do,” he added.

— Samantha Subin

Federal Reserve Chairman Powell said the central bank will watch what happens to the economy and inflation and adjust policy accordingly.

“If the economy remains strong and inflation does not sustainably move toward 2%, we may ease policy restraint more slowly. If the labor market were to weaken unexpectedly or inflation falls more quickly than expected, we may move more quickly,” Powell said in prepared remarks during the press conference.

“Politics is well positioned to manage the risks and uncertainties that we face as we pursue both sides of our dual mandate,” he added.

—Sarah Min

Donald Trump’s presidential election victory will not directly affect monetary policy, Fed Chairman Powell said on Thursday.

“In the short term, the election will have no effect on our policy decisions,” Powell said.

However, he issued a warning that any change in the administration could help shape Fed policy as the central bank seeks to cut interest rates.

“Just in principle, it’s possible that any administration’s policies or policies enacted by Congress could have economic effects over time,” he said. “So, along with countless other factors, forecasts of these economic effects will be included in our economic models and will be taken into account.”

– Jeff Cox

Fed Chairman Powell expressed that the US central bank had no concrete decisions going forward regarding further interest rate cuts.

“In considering further adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook and the balance of risks,” Powell said at a news conference Thursday afternoon. “We are not on any predetermined course. We will continue to make our decisions, meeting by meeting.”

—Lisa Kailai Han

Federal Reserve Chairman Powell spoke Thursday afternoon after the central bank issued a quarter-point rate cut. He also explained the politicians’ reasoning for the decision.

Fed Chairman Jerome Powell said the labor market is not a major driver of inflation.

“The labor market is not a source of significant inflationary pressures,” Powell said.

The Fed chairman said wage growth has slowed in recent months, while unemployment has risen compared with a year ago. Overall, he said the labor market is considered less tight than just before the pandemic, but it is still considered “solid.”

– Alex Harring

The central bank’s move came as expected — and it will likely continue to take a measured approach going forward, said Greg McBride, financial analyst at Bankrate.

“The Federal Reserve continues to lift its foot off the brake pedal and cut interest rates by a quarter of a percentage point as expected,” he said. “The solid pace of economic growth means the Fed can abandon the urgency seen with the half-point cut in September and take a more deliberate, quarter-point pace with this and future rate cuts.”

He noted that the recent rise in government interest rates, however, dampens the effect of the rate cut.

“The big increase in mortgage rates, from 6.2% to 7% in the last 7 weeks, hits harder than a quarter percentage point drop in a credit card rate,” McBride added.

—Darla Mercado

Fed Chair Powell is likely to face questions from reporters at the press conference at 2:30 PM ET on the effects of tax and spending proposals promised in the incoming Trump administration that takes office in January.

Donald Trump as president often railed against the Fed and Powell. In 2019, he beat e.g. the central bank numerous times, at one point saying it was a bigger obstacle to American prosperity than China.

—Scott Schnipper

The three major averages were little changed after the Federal Reserve issued its expected quarter-point rate cut.

The S&P 500 was last up nearly 0.7% around 2:10 PM ET, while the Nasdaq Composite was higher by 1.4%. The Dow Jones Industrial Average flickered near the flat line, up about 15 points.

— Darla Mercado

At 1:50 PM ET, the S&P 500 was up 0.6%, while the Nasdaq Composite was up 1.3%. The Dow Jones Industrial Average hovered near the flat line.

The 10-year Treasury yield was lower by 8 basis points and traded at 4.34%. The 2-year government yield was at 4.2%, reflecting a decrease of 6 basis points.

— Darla Mercado

Fed officials’ current view of the labor market could be one of the big takeaways from Powell’s press conference on Thursday, according to James Ragan, director of wealth management research at DA Davidson.

“The biggest thing he can talk about is the labor market because we had the hurricane-impacted number for October. It’s obviously a weak number, but I think the markets discounted it a lot for the hurricane impact. So I want to hear him talk a little bit beyond that data,” Ragan told CNBC.

The nonfarm payrolls report for October showed a gain of just 12,000 jobs. However, storms and a since-resolved strike among Boeing workers may have temporarily lowered that number, according to the Bureau of Labor Statistics.

– Jesse Pound

With the Federal Reserve expected to make a quarter-point rate cut on Thursday, the most important event for markets will likely be Chairman Jerome Powell’s press conference at 6 p.m. 2 p.m. ET.

Traders will be on the lookout for clues from Powell on the future path of interest rate policy. Fed funds futures trading suggests about a 63% chance the central bank will issue another quarter-point rate cut in December, but traders are also weighing the likelihood policymakers could choose to skip that month.

Further complexity lies ahead for the central bank in light of Donald Trump winning a second trip to the White House this week. That’s because the new administration’s plans include tax cuts and tariffs that could affect the Fed’s efforts to curb inflation.

Read more about the Fed’s November meeting from CNBC’s Jeff Cox here.

— Darla Mercado

The Federal Reserve is widely expected to cut interest rates by a quarter point on Thursday, taking another step toward unwinding its tightening policy.

To that end, consumer interest rates have moved significantly since the Fed began its hike campaign in March 2022, and in some corners of the market rates have cooled slightly since the central bank made its first half-point rate cut in September.

The rate on a $30,000 home loan is at 8.7% for the week of Nov. 1, according to Bankrate. That’s down from 9.25% in the week of September 13, but still significantly higher than the 4.27% rate back in March 2022.

Credit card interest rates came in at 20.5% last week per bank rate, significantly higher than the 16.34% in March 2022. But they are marginally cooler compared to last month’s rate of 20.78%.

The rate on a 30-year fixed mortgage was 7.09% in the week of November 1, significantly higher than the 4.29% in March 2022. However, it is also higher compared to the week of September 13, when the rate was 6, 12%.

This is because mortgage interest rates loosely follow 10-year government yieldwhich has recently taken a leg higher. In fact, the benchmark rate stood at 4.363% in the week of November 1st, which is significantly higher than the 3.649% it was trading at in mid-September.

— Darla Mercado, Nick Wells

Traders went into Thursday’s Fed meeting confident that a rate cut was on the way, but became less certain about what would happen in December.

The Fed funds futures market pointed to a 100% chance that policymakers would ease, with just a sliver of a possibility that the cut could hit half a percentage point in September. Market-implied odds were about 99% for a quarter-point move, according to CME Group’s FedWatch tracker of 30-day fed funds futures contracts.

For December, the odds of a break are rising, at 32.6% as of Thursday afternoon, up about 8 percentage points from a week ago. If the Fed doesn’t skip December, the odds of that happening in January are about 68%, the CME gauge shows.

– Jeff Cox