The Federal Reserve kept interest rates unchanged at its June meeting on Wednesday. Yahoo Finance spoke to experts, analysts, and reporters regarding the impact on investors and how the markets are reacting to the Fed’s decision.
Yahoo Finance’s Fed reporter Jennifer Schonberger broke down the Fed’s statement. Schonberger said, “The Federal Reserve holding rates steady in the current range of 5 to 5 and a quarter percent, but raising interest rate projections to a new peak of 5.6 percent.”
Jordan Jackson, JPMorgan Asset Management Global Market Strategist, and RJ Gallo, Federated Hermes Senior Portfolio Manager, further analyzed the Fed’s statement. Jackson said, “I don’t think they need to keep raising rates. I think they should be done.”
Gallo added, “The Fed is setting a little bit of a hawkish pause here and that confirms the markets’ expectations.”
Yahoo Finance Markets reporter Jared Blikre discussed the market reaction. Blikre said, “If this is in fact a hawkish pause, we would expect to see potentially a stronger dollar along with yields going up and that’s what’s been happening.”
Yahoo Finance’s Fed reporter Jennifer Schonberger returned to discuss Fed Chair Jerome Powell’s comments on the decision. Schonberger said, “Fed Chair Powell saying that the Fed has not made enough progress on inflation … that’s why the committee sees 50 basis points more of rate hikes.”
Victoria Fernandez, Crossmark Global Investments Chief Market Strategist, thought that the Fed didn’t give investors a “clear answer” for its path moving forward. Fernandez said, “I don’t think we got a very clear answer as to what the goal was going forward.”
MacroPolicy Perspectives Founder and President Julia Coronado discussed the biggest takeaways from Powell’s press conference. Coronado said, “Slowing the pace, he said that a bunch of times. And then the other thing is to hold the threat of rate hikes over the market for longer.”
Yahoo Finance’s Alexandra Canal broke down the Fed dot plot, including projections for inflation and interest rates going forward. Canal said, “That does suggest that the Fed is going to raise rates two more times by 25 basis points.”
Video highlights:
00:00:03 – Yahoo Finance’s Fed reporter Jennifer Schonberger
00:00:16 – JPMorgan Asset Management Global Market Strategist Jordan Jackson
00:00:33 – Federated Hermes Senior Portfolio Manager RJ Gallo
00:00:43 – Yahoo Finance Markets reporter Jared Blikre
00:00:57 – Yahoo Finance’s Fed reporter Jennifer Schonberger
00:01:08 – Crossmark Global Investments Chief Market Strategist Victoria Fernandez
00:01:24 – MacroPolicy Perspectives Founder and President Julia Coronado
00:01:41 – Yahoo Finance’s Alexandra Canal
Video transcript
[MUSIC PLAYING]
JENNIFER SCHONBERGER: No change. The Federal Reserve holding rates steady in the current range of 5% to 5 and 1/4%, but raising interest rate projections to a new peak of 5.6%, implying at least one more rate hike from here.
JORDAN JACKSON: I think this is very hawkish. I mean, the idea that the Dow plots have moved up to include about two more rate hikes coming from the Fed. I think now you’re going to start to see markets maybe projecting maybe 50 basis points at the July meeting to get us there. I don’t think they need to keep raising rates. I think they should be done.
RJ GALLO: The Fed is sending a little bit of a hawkish pause here in that sense. I think it confirms the market’s expectation. I think the key here is what does Chairman Powell say from the podium.
JARED BLIKRE: If this is, in fact, a hawkish pause, we would expect to see potentially a stronger dollar along with yields going up. And that’s what’s been happening here. We’re still waiting for how to take the podium. And that’s really when we see the fireworks
JENNIFER SCHONBERGER: Fed Chair Powell saying that the Fed has not made enough progress on inflation. It needs to come decisively lower. And that’s why the committee sees 50 basis points more of rate hikes here.
VICTORIA FERNANDEZ: But didn’t anticipate that the Fed would come out and do something different because they don’t want to cause that extra volatility in the markets. However, at the press conference, I don’t think we got a very clear answer as to what the goal was going forward.
JULIA CORONADO: It seemed to mainly be about a couple of things for me. One, slowing the pace. He said that a bunch of times. And then the other thing is to hold the threat of rate hikes over the market for longer, including two hikes in the baseline, essentially takes us through year end at this new slower pace.
ALEXANDRA CANAL: Most FOMC members, each dot represents a member here. They see interest rates peaking at 5.6% this year. Now, that’s higher from the March projection of 5.1%. So that does suggest that the Fed is going to raise rates two more times by 25 basis points or perhaps one time by just 50 basis points here.
[MUSIC PLAYING]