Fed, Powell and supply shocks
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April's inflation report will be welcome news to the FOMC—but that doesn't mean the Powell-led group will cut interest rates.
Risks of higher unemployment and higher inflation have risen, according to the Federal Reserve. Those factors may prompt stagflation.
With mounting evidence that tight labor markets do not necessarily boost inflation and facing massive job losses in 2020, Federal Reserve Chair Jerome Powell oversaw a shift in U.S. central bank strategy that put more weight on the goal of full employment and pledged not to use a low jobless rate as a reason in itself to raise interest rates.
The Fed is now hemmed in by a rising risk of stagflation. It doesn‘t know where the economy is headed, or is unwilling to take a position. At this point, “hope
The central bank is expected to hold steady on rates, keeping them at a range of 4.25% to 4.5%. What Fed Chair Jerome Powell says at his presser will be key.
Markets had a positive week, with the major indexes advancing in the +3% range despite a slowing economy and less than stellar corporate reports.
An analysis by Goldman Sachs finds that reducing the independence of central banks like the Federal Reserve can contribute to higher inflation, lower stock prices and a weaker currency.