Summary of key points from the Federal Reserve’s FOMC meeting
Inflation is still high and is expected to fall only once this year but four times in 2025.
CPI data
Inflation and Economic Outlook
- Inflation has slowed materially but remains too high. Data so far this year is not enough to support a rate cut and more data is needed to boost confidence.
- U.S. GDP growth is expected to be 2.1% this year and 2.0% in the next two years.
- The labor market has returned to pre-pandemic levels and the strong performance is expected to continue, but the job market is cooling.
- If the PCE inflation rate reaches 2.6%-2.7%, it will be a good level.
- May CPI data performed well, but the impact on the risk balance needs to be observed.
Monetary Policy and Interest Rates
- The federal funds rate target range remains unchanged at 5.25%-5.50%.
- The median appropriate level of the federal funds rate is expected to be 5.1% at the end of this year, 4.1% at the end of 2025, and 3.1% at the end of 2026.
Powell
Highlights from Powell's press conference
- The economy is making progress on employment and inflation, but inflation remains too high.
- The labor market has become more balanced as the Federal Reserve focuses on promoting employment and controlling inflation.
- Recent indicators of economic activity suggest the economy is expanding at a solid pace.
- Nominal wage growth has slowed over the past year, with the gap between job openings and workers narrowing.
- Overall PCE prices increased by 2.7%, core PCE prices increased by 2.8%, CPI increased by 3.3%, and core CPI increased by 3.4%.
- The economic outlook is uncertain, and the Federal Reserve needs more data to strengthen its confidence in inflation falling.
- Reducing policy restrictions too early or too little could lead to a reversal of inflationary progress, while too late or too little could unduly weaken economic activity and employment.
- The FOMC will make decisions on a meeting-by-meeting basis based on data.
Summary of Q&A
- Core PCE is expected to be 2.8% by the end of the year. If it reaches 2.6%-2.7%, it will be a good level.
- Policy adjustments will be data dependent and more good inflation data will help build confidence.
- The labor market needs to cool further to bring inflation down to 2%, and is now gradually moving towards a better balance.
- Recent inflation data shows good progress, but more data is needed to boost confidence.
📊 The Federal Reserve will adjust policies meeting by meeting based on economic data and risk balance, with the goal of controlling inflation and restoring price stability while maintaining strong economic growth and low unemployment.
FOMC
With the slower inflation rate and the hope to have interest rate drop in future, I am generally bullish for the major index like $S&P 500(.SPX)$
@TigerStars @MillionaireTiger @CaptainTiger @Daily_Discussion @Tiger_comments @TigerGPT
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Here is a summary of the key points from the Federal Reserve's FOMC meeting:
Inflation: Inflation is still high and is expected to fall only once this year but four times in 2025. The CPI data shows that inflation has slowed materially but remains too high. More data is needed to support a rate cut and boost confidence.
Economic Outlook: U.S. GDP growth is expected to be 2.1% this year and 2.0% in the next two years. The labor market has returned to pre-pandemic levels, and the strong performance is expected to continue. However, the job market is cooling.
Monetary Policy and Interest Rates: The federal funds rate target range remains unchanged at 5.25%-5.50%. The median appropriate level of the federal funds rate is expected to be 5.1% at the end of this year, 4.1% at the end of 2025, and 3.1% at the end of 2026.
Powell's Highlights: Federal Reserve Chairman Jerome Powell highlighted that the economy is making progress on employment and inflation, but inflation remains too high. The labor market has become more balanced, and the FOMC will make decisions based on data.
Based on the slower inflation rate and the potential for future interest rate drops, the major indices like the S&P 500 (.SPX), Nasdaq100 Bull 3X ETF (TQQQ), Nasdaq100 Bear 3X ETF (SQQQ), DJIA (.DJI), and Invesco QQQ (QQQ) are generally expected to have a bullish outlook.
Please note that the above information is for reference purposes only and should not be considered as investment advice. It is important to conduct thorough research and analysis before making any investment decisions.