Powell says Fed to stay on hold until clarity on tariff impact
(Reuters) – U.S. economic growth appears to be slowing, with consumer spending growing modestly, a rush of imports to avoid tariffs likely to weigh on estimates of gross domestic product, and sentiment souring, U.S. Federal Reserve Chair Jerome Powell said on Wednesday.
For now, he said in remarks prepared for delivery at the Economic Club of Chicago, the Fed could keep its benchmark interest rate steady “to wait for greater clarity before considering any adjustments to our policy stance.”
Repeating comments made earlier this month, the Fed chief noted that the impact of those and other policy changes “are still evolving,” but likely to be “larger than anticipated.”
MARKET REACTION:
STOCKS: The S&P 500 extended a decline and was down 2.15%
BONDS: US Treasury 10-year yield fell and was 2.7 bp lower on day at 4.2961%
FOREX: The dollar index was down 0.6%
COMMENTS:
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“He is basically saying hey, look, you know, tariffs could pose a challenge between controlling inflation and boosting growth.”
“It looks like first quarter growth is slowing down, consumer spending is moderating.”
“Powell’s saying what the market has been fearing all along. And it’s coming from the Fed chief, confirming all these things.”
“Gold is sky-rocketing. The S&P is dropping, the Dow and the Nasdaq are at the lows of the day.”
“Powell’s comments are just confirming what the market has been fearing all along.”
ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT
“The Fed is waiting to see where things go before they make any type of movement on rates, to see if inflation is going to be temporary or if it’s going to be a one-time thing, to see how long these tariffs last and whether or not there’s any kind of change to it.”
“They, like everybody else in the market, are probably just as perplexed by the tariffs, the implementation of tariffs and the pullback and the pauses. And that’s why they’re having to wait this out, because if they move prematurely, they’re afraid that they’re going to add to the inflationary pressures.”
(Compiled by the Global Finance & Markets Breaking News team)
