tl;dr
The U.S. Federal Reserve has decided to maintain its benchmark federal funds rate at 5.25%-5.50%, citing a slight decline in inflation. Federal Reserve Chairman Jerome Powell indicated that the decision aims to uphold economic stability, aligning with the Fed's cautious approach to inflation targets...
The U.S. Federal Reserve has decided to maintain its benchmark federal funds rate at 5.25%-5.50%, citing a slight decline in inflation. Federal Reserve Chairman Jerome Powell indicated that the decision aims to uphold economic stability, aligning with the Fed's cautious approach to inflation targets. Revised projections suggest minimal rate cuts in the near future, with expectations of a 25 basis point cut by the end of 2024 and potential further relaxation in 2025.
The latest Consumer Price Index (CPI) report, showing a 3.3% year-over-year increase in May, has contributed to the Fed's revised outlook. Economists foresee a possible rate cut in September based on sustained low inflation trends. Market indices responded positively to the Fed's measures, with notable upticks in Nasdaq and S&P 500. However, more moderate expectations for rate cuts have tempered initial excitement in sectors like cryptocurrency.
Jerome Powell's speech highlighted improvements in the economy, emphasizing strong job creation, low unemployment, and robust consumer consumption and business investment, while acknowledging the need to manage inflation risks.
In the meeting, Powell noted that the efforts to cut down inflation have been quite “modest” unlike previous statements of standstill. In its updated projections, the Federal Reserve now expects one 25 basis point cut by the end of 2024, reversing its earlier projections of multiple cuts. For the year 2025, there is also the expectation of further relaxation with predicted cuts of up to 100 basis points in view of the faster track towards the desired inflation rates.
The latest Consumer Price Index (CPI) report, released prior to the meeting, indicated a deceleration in inflation, contributing to the Fed’s revised outlook. May’s CPI showed an increase of only 3.3% year-over-year, down from April’s 3.4%, signaling a potential stabilization in price growth. Economists such as the head of RSM, Joe Brusuelas, and James Knightley from ING have postulated that if this trend of low inflation is to be sustained then a rate cut could be a possibility in September.
Markets, after the Fed meeting responded positively to the news, with significant upticks in major indices. Nasdaq and S&P 500 went up as investors had positive expectations of the Fed’s measures on the monetary policy given the current economic conditions. However, the more moderate expectations for rate cuts have somewhat eased the initial excitement in sectors such as cryptocurrency, with only moderate gains in Bitcoin.
Jerome Powell gave a detailed account of the state of the economy in his speech after the committee’s decision. Powell observed that the economy has improved a great deal, with many jobs created and unemployment remaining low, indicating the economy remains strong. However, there are still risks that inflation will remain above the target, as the Fed continues to tread carefully. Powell's speech was fairly optimistic while acknowledging that there are still risks that have to be managed, especially in terms of inflation.
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The Relative Strength Index (RSI) stands at 2.602, indicating a neutral position. The stock is currently below the 200-day moving average of -0.901.
The trading volume for C3 was 310,582,000, with a beta of 0.196.
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