Fed Chair Powell says smaller interest rate hikes could start in December

[BumRushDaShow]

Source: CNBC

WASHINGTON – Federal Reserve Chairman Jerome Powell confirmed Wednesday that smaller interest rate increases are likely ahead even as he sees progress in the fight against inflation as largely inadequate.

Echoing recent statements from other central bank officials and comments at the November Fed meeting, Powell said he sees the central bank in position to reduce the size of rate hikes as soon as next month.

But he cautioned that monetary policy is likely to stay restrictive for some time until real signs of progress emerge on inflation. “Despite some promising developments, we have a long way to go in restoring price stability,” Powell said in remarks delivered at the Brookings Institution.

The chairman noted that policy moves such as interest rate increases and the reduction of the Fed’s bond holdings generally take time to make their way through the system. “Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” he added. “The time for moderating the pace of rate increases may come as soon as the December meeting.”

Read more: https://www.cnbc.com/2022/11/30/fed-chair-jerome-powell-says-smaller-rate-hikes-could-come-in-december.html

[peppertree]

1. Naturally, he waits until after the election to say this

Reminds me of when Greenspin waited literally until the day after Bush was selected in Dec. 2000, to start bringing down unreasonably high interest rates (considering there was almost no inflation).

[BumRushDaShow]

2. We are still lower than in the past

(from here - https://www.macrotrends.net/2015/fed-funds-rate-historical-chart)

[oldsoftie]

6. everyone under 40 thinks a 7% mortgage is SO HIGH.

My parents bought their first house 50 yrs ago and paid about 7%
My first home I assumed a 9 1/4% rate and everybody thought I STOLE it. That was 1982

[BumRushDaShow]

7. I remember my first new car note

(in the late '80s - had used cars before then) was something like 8%.

[mopinko]

8. i was around for the 80's. they rly shouldnt stop that many home buyers.

and it's the crappy return on savings instruments and bonds that led to the 08 crash.
0% is not good, folks. 6-8% keeps home prices low, it's gonna all wash out.

[BumRushDaShow]

9. Agree.... But IMHO what probably gets a wider range of people

are the credit card interest rates, where states apparently have authority to cap those. Yet even during the "0% - 0.25%" fed rate periods, the credit card interest rates could go as high as 25% like here in PA. So IMHO there needs to be some more regulation there. That used to be considered "usury".

[mopinko]

11. tru dat.

i also remember 18% max on cc's. thx st ronnie.

[mathematic]

3. He literally said the same thing the week before the election

From the Nov 2nd transcript:

And that’s why I’ve said at the last two press conferences that at some point, it
will become appropriate to slow the pace of increases. So that time is coming, and it may come
as soon as the next meeting or the one after that.

Take heart that you were wrong and the Fed is not running some scheme to elect Republicans.

[FredGarvin]

4. Gotta support equities vs hard working people

There is ZERO progress in inflation...as a matter of fact it's still running at all time highs.

Likewise, Fed Fund Rates are still at historically low rates.

Powell is ALWAYS behind the curve.

[Fullduplexxx]

5. Now that he's affecting the jobs numbers ...

[progree]

10. (JOLTS) Job openings fell in October amid Fed efforts to cool labor market, 11/30/22

https://www.cnbc.com/2022/11/30/jolts-report-october-2022-job-openings-fall-amid-fed-efforts-to-cool-labor-market.html
      Various excerpts --

The Job Openings and Labor Turnover Survey showed there were 10.33 million vacancies for the month, decline of 353,000 from September and down 760,000 compared with a year ago.

That left 1.7 job openings per available worker for the month, down from a 2 to 1 ratio just a few months ago.

The quits level, a measure of worker confidence that they can easily move from one job to another, also declined, edging lower to 4.026 million, down 34,000 from a month ago and well below the record 4.5 million in November 2021 during what had been dubbed the “Great Resignation.”

Total separations nudged higher to 5.68 million, while layoffs and discharges also rose, up 58,000 to 1.39 million.

The report came the same day that payroll processing firm ADP reported job gains of just 127,000 in November, the lowest total since January 2021.

Once arcane job openings survey becomes darling of Fed's eye, Reuters, 11/29/22
https://www.reuters.com/markets/us/once-arcane-job-openings-survey-becomes-darling-feds-eye-2022-11-29/

=======================
Anyway, today's JOLTS report may have also influenced his statement today. The JOLTS report came out at 10am ET. A decline in job openings is what he wants to see.

PCE inflation (the Fed's preferred inflation measure, specifically the core PCE) comes out tomorrow 830am ET.

[progree]

12. The problem: The median house price was 3x median income in the 80s, it's close to 7x now

https://www.democraticunderground.com/10142969709#post13

So those that carry on about how tough we boomers had it compared to them thar whiny spoiled snowflake Gen Zs / Millenials because our mortgage rates were a lot higher need to remember that house prices are a lot higher relative to incomes now than they were back then. The monthly mortgage payment depends on the house price (or more accurately the amount that is financed), not just the interest rate.

Also, most homebuyers back then didn't pay the extreme mortgage rates that some are claiming. I bought a house in June 1980 and my overall combined interest rate was 10.0%.

[FakeNoose]

13. The real estate market has already tanked

... wasn't that the original objective?