All articles tagged with #fomc
Fed minutes from the April meeting show a rising likelihood of policy firming and potential rate hikes if inflation stays above 2%, signaling a shift away from an easing bias and posing a risk to a historically pricey stock market that had been counting on rate cuts for future growth.
Despite the S&P 500’s earnings-driven optimism, a rally in long-term yields (30-year above 5% and a breakout in the 10-year) adds risk to stocks. A potential Iran deal could help cool yields before the July FOMC, but if the long end keeps rising I’ll trim risk. The AAII sentiment shows a contrarian tilt, and I’m still buying the pullback—staying bullish on earnings while staying nimble and ready to reduce exposure if yields resume their ascent.
Minutes from the Fed’s latest policy meeting suggest incoming chair Kevin Warsh will likely defy Trump on rate cuts and preside over a committee tilting toward policy firming (rate hikes) as inflation remains well above 2%. The minutes show a majority of participants desire higher rates if inflation stays elevated, while markets price in a rate hike later this year amid stubborn inflation and a volatile outlook for stocks and bonds.
Minutes from the latest Federal Reserve meeting show a majority of policymakers indicated further rate increases could be appropriate if inflation remains persistently above 2%, even as the committee kept the policy rate at 3.5%-3.75% and faced four dissenters. The discussions centered on how long war-driven inflation would last, with some participants pushing to drop easing-bias language; markets still price in a potential hike by late 2026 or early 2027. Warsh takes over as chair later this year, while inflation remains elevated amid energy price shocks and other factors.
Incoming Fed chair Kevin Warsh may need to take a hawkish stance to appease bond vigilantes, with Yardeni predicting a July rate hike despite market-implied odds being low and yields rising on inflation concerns.
Powell will remain on the Federal Reserve Board after his chair term ends, breaking a 75-year tradition that former chairs depart the board. The move comes amid tense relations with Trump and a DOJ probe into a Fed HQ renovation (now referred to an inspector general for review), but near-term policy impact may be limited. At Powell’s last chair meeting, the FOMC kept rates at 3.50–3.75% with one dissent; Powell’s continued presence could influence future, more dovish appointments, yet the majority on the committee still decides policy, leaving the market impact uncertain.
The Motley Fool warns that May 15 could mark a pivotal, volatile moment for stocks: Powell’s exit as Fed chair and the likely shift to hawkish nominee Kevin Warsh could unleash a more divided FOMC, pursue balance-sheet reduction, push up long-term rates, and threaten the multi-year stock rally by loosening liquidity and raising funding costs.
Fed regional presidents Kashkari, Logan, and Hammack dissented from the post‑meeting statement, objecting to language that signaled a future easing move and to an easing bias amid uncertainty and ongoing inflation; Governor Miran again dissented in favor of a rate cut. The 8‑4 vote held rates for a third consecutive time, with inflation at 3.2% core in March and Middle East tensions adding upside risks to the outlook.
Powell’s last FOMC meeting kept rates at 3.50%–3.75% but showed a record dissent against easing, suggesting no rate cuts in 2026. With the market’s CAPE ratio around 40—the highest since 2000—stocks face downside risk if borrowing costs stay high and easing is off the table. The development marks a potentially dubious turning point for Wall Street as valuations remain historically stretched.
Fed Chair Jerome Powell and incoming chair contender Kevin Warsh will participate in the mid-June FOMC meeting, a historic overlap that could spark subtle policy tensions as Warsh signals for easing while Powell stresses Fed independence; with core inflation around 3.2% and a robust labor market, near-term rate cuts are unlikely, but the high-stakes dynamic amid political pressure and internal debates could influence the Fed’s path and messaging.
The Fed kept the target federal funds rate at 3.5%–3.75%, noting solid economic activity but elevated inflation and global uncertainty, and said it will adjust policy as incoming data evolve to support maximum employment and a 2% inflation goal.
Powell's likely final FOMC meeting is expected to keep rates unchanged as inflation remains stubborn and the labor market stays resilient. Markets price in no rate move, while focus shifts to Powell’s future and a transition to Kevin Warsh, all set against elevated energy prices that complicate the Fed’s path to easing.
With Powell’s term ending May 15, Warsh’s Senate testimony signals a hawkish pivot: a substantial reduction of the Fed’s bloated balance sheet, which could raise borrowing costs and spark market volatility as investors recalibrate the central bank’s policy path.
All eyes are on Powell as he wraps up his 67th FOMC meeting and faces a potential end to his chair tenure amid ongoing investigations and a high-stakes Supreme Court case; Warsh moves toward Senate confirmation, and the leadership question hangs over the Fed. The policy decision is expected to hold rates steady while inflation remains energy-driven and growth looks solid, with Powell’s post-meeting remarks likely to hint at the path forward.
The piece argues that while tariffs have grabbed headlines, the bigger danger to the Trump-era stock rally is Jerome Powell’s May 15 departure and the hawkish nomination of Kevin Warsh to replace him. A shift toward tighter policy and a reduced Fed balance sheet could push higher borrowing costs and weigh on the Dow, S&P 500, and Nasdaq even as AI advances and buybacks support markets.