(Reuters) -The U.S. central bank will be in no rush to cut interest rates while it waits for more clarity on how the policies of the new Trump administration affect the economy, Federal Reserve Chair Jerome Powell said at an economic forum in New York City on Friday.
Powell spoke at a volatile time, with stock markets and bond yields both declining in the wake of President Donald Trump’s whipsaw announcements of steep import tariffs on major trading partners Mexico and Canada, followed by delays in implementing them. Trump has also doubled tariffs on imports from China.
MARKET REACTION:
STOCKS: The S&P 500 pared a loss and was off 0.06%
BONDS: US Treasury 10-year yield reversed 1.3 bp higher on the day to 4.295%
FOREX: The dollar index ticked up but was still off 0.25% from late Thursday
COMMENTS:
LINDSEY BELL, CHIEF MARKET STRATEGIST, CLEARNOMICS, NEW YORK
“Powell is giving a sense of calm to a market that’s been moving very erratically. He said the economy is in a good place and inflation is still anchored despite some of the survey data.”
“What Powell is doing today is giving the market a sense of direction. It’s a market that has lacked significant direction because of the back and forth on tariffs, the see-sawing, from the Trump administration.”
“The fact that he’s calm and composed is a lot better than the hardline tone we’re getting from the Trump administration around tariffs, around DOGE (Department of Government Efficiency) and government spending.”
“Investors are grasping for something that gives them a better understanding of what’s going on. He’s painting a very clear picture. This tariff uncertainty is real … The market can react sharply to the news, but the economic outcome can be much less significant.”
“Fewer rate cuts is less of a concern to the markets right now than the economic impact tariffs could potentially impose on the economy. Because of Powell’s assessment of the economy in a good place. Investors are finding solace in that.”
TONY ROTH, CIO, WILMINGTON TRUST INVESTMENT ADVISORS
“The Fed is going to be very conservative on what they say until we know whether or not the tariffs are tactical or strategic, and if they do turn out to be strategic, they’re still going to wait until the hard data demonstrates both that inflation is low, and the economy is in recession before they really do very much. Those are the two gates that you’d have to get through for them to do anything, but the likelihood of getting through those two gates is mounting quickly. If tariffs are strategic, I would say we probably go into a recession in the next three months.”
ADAM SARHAN, CHIEF EXECUTIVE, 50 PARK INVESTMENTS, NEW YORK
“Powell made it very clear he’s going to stay focused on his goals, and that’s the right thing for him to do.
“From where I sit, the economy is in a good place, even with all the headlines and the noise that continue to hit the tape. But the market is not bullish. It’s shifting to a more bearish stance.
“An oversold bounce is way overdue. It’s a matter of when, not if… if we can’t bounce, that’s the market speaking loud and clear.
“We have a lot of technical damage that needs to be repaired. I wouldn’t be surprised to see us close higher today.”
JAMIE COX, MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND, VA
“Powell is echoing what the rest of us feel: unease that while the adjustments made by the administration may well work and put the country on better financial footing, the speed and whipsaw like nature of the change makes it difficult to predict and to plan around. So, the best action when that occurs is to sit and wait.”
JAY WOODS, CHIEF GLOBAL STRATEGIST, FREEDOM CAPITAL MARKETS, NEW YORK
“This market will turn on any Powell commentary. He probably can give investors a little calm in the storm…but the market is too jittery. We’re not supposed to see intraday swings like this. We fell after Powell stopped speaking and now the market’s waiting for the next speaker who can calm things down.”
“The market is jumping from one headline to the next. Trump is causing so much anxiety… we may get some short covering going into the weekend.”
“As someone looking for an opportunity to buy stocks, this is good because I don’t think it derails the secular bull market…I think any more of a selloff will be the last washout. If (the S&P 500) can close above the 200 daily moving average, we might get a relief rally next week.”
OLIVER PURSCHE, SENIOR VICE PRESIDENT, WEALTHSPIRE ADVISORS, NEW YORK
“Powell’s statements reflect the anxiety, an insecurity that every investor is facing right now and that the market is reflecting as well. That’s why you’re seeing 1% moves in either direction.”
“Because nobody seems to be able to discern what Trump is going to do next. There’s tariffs, there’s no tariffs. There’s pause on tariffs, there are exemptions.”
“I think it’s slightly misleading to say the economy’s in a good place because it’s clearly slowing and inflation is clearly still an issue. And could get worse depending on what happens with tariffs and so forth.”
(Compiled by the Global Finance & Markets Breaking News team)
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