Finance
Fed holds rates steady and notes progress on inflation
WASHINGTON – Federal Reserve officials on Wednesday held short-term interest rates steady but indicated that inflation is getting closer to its target, which could open the door for future interest rate cuts.
Central bankers made no obvious indications, though, that a reduction is imminent, choosing to maintain language that indicates ongoing concerns about economic conditions, albeit with progress. They also preserved a declaration that more progress is needed before rate reductions can happen.
“The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance,” the Federal Open Market Committee’s post-meeting statement said, a slight upgrade from previous language.
“Inflation has eased over the past year but remains somewhat elevated,” the statement continued. “In recent months, there has been some further progress toward the Committee’s 2 percent inflation objective.”
However, speaking with the media, Chair Jerome Powell indicated that while no decision has been made about actions at future meetings a cut could come as soon as September if the economic data showed inflation easing.
“If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September,” Powell said.
Stocks react to Powell comments
Markets had been looking for signs that the Fed will reduce rates when it next meets in September, with futures pricing pointing to further cuts at the November and December meetings, assuming quarter percentage point moves. Stocks rallied to the highest levels of the day on Powell’s comments.
As for the Fed’s statement, its language also represented an upgrade from the June meeting, when the policy statement indicated only “modest” progress in bringing down price pressures that two years ago had been running at their highest level since the early 1980s. The previous statement also characterized inflation as simply “elevated,” rather than “somewhat elevated.”
There were a few other tweaks as well, as the FOMC voted unanimously to keep its benchmark overnight borrowing rate targeted between 5.25%-5.5%. That rate, the highest in 23 years, has been in place for the past year, the result of 11 increases aimed at bringing down inflation.
One change noted that committee members are “attentive” to the risks on both sides of its mandate for full employment and low inflation, dropping the word “highly” from the June statement.
Still, the statement kept intact one key sentence about the Fed’s intentions: “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”
That phrase has underscored the Fed’s data dependence. Officials insist they are not on a predetermined course for rates and won’t be guided by forecasts.
Price pressures off 2022 peak
Economic data of late has indicated that price pressures are well off the boil from their peak in mid-2022, when inflation hit its highest level since the early 1980s.
The Fed’s preferred measure, the personal consumption expenditures price index, shows inflation around 2.5% annually, though other gauges indicate slightly higher readings. The central bank targets inflation at 2% and has been insistent that it will stick with that goal despite pressure from some quarters to tolerate higher levels.
Though the Fed has held to its tightest monetary policy in decades, the economy has continued to expand.
Gross domestic product registered a 2.8% annualized growth rate in the second quarter, well above expectations amid a boost from consumer and government spending and restocking of inventories.
Labor market data has been a little less robust, though the 4.1% unemployment rate is far from what economists consider full employment. The Fed statement noted that unemployment “has moved up but remains low.” A reading Wednesday from payrolls processing firm ADP showed July private sector job growth of just 122,000, indicating that the labor market could be weakening.
However, there was some positive inflation data in the ADP report, with wages increasing at their slowest pace in three years. Also Wednesday, the Labor Department reported that costs of wages, benefits and salaries increased just 0.9% in the second quarter, below expectations and the 1.2% level in the first quarter.
Fed officials have vowed to proceed carefully, despite signs that inflation is weakening and worries that the economy won’t be able to withstand the highest borrowing costs in some 23 years for much longer. Their position got some fortification Wednesday, when yet another economic report showed that pending home sales surged a stunning 4.8% in June, defying expectations for a 1% increase.
Finance
Buffett denies social media rumors after Trump shares wild claim that investor backs president crashing market
Warren Buffett went on the record Friday to deny social media posts after President Donald Trump shared on Truth Social a fan video that claimed the president is tanking the stock market on purpose with the endorsement of the legendary investor.
Trump on Friday shared an outlandish social media video that defends his recent policy decisions by arguing he is deliberately taking down the market as a strategic play to force lower interest and mortgage rates.
“Trump is crashing the stock market by 20% this month, but he’s doing it on purpose,” alleged the video, which Trump posted on his Truth Social account.
The video’s narrator then falsely states, “And this is why Warren Buffett just said, ‘Trump is making the best economic moves he’s seen in over 50 years.'”
The president shared a link to an X post from the account @AmericaPapaBear, a self-described “Trumper to the end.” The X post itself appears to be a repost of a weeks-old TikTok video from user @wnnsa11. The video has been shared more than 2,000 times on Truth Social and nearly 10,000 times on X.
Buffett, 94, didn’t single out any specific posts, but his conglomerate Berkshire Hathaway outright rejected all comments claimed to be made by him.
“There are reports currently circulating on social media (including Twitter, Facebook and Tik Tok) regarding comments allegedly made by Warren E. Buffett. All such reports are false,” the company said in a statement Friday.
CNBC’s Becky Quick spoke to Buffett Friday about this statement and he said he wanted to knock down misinformation in an age where false rumors can be blasted around instantaneously. Buffett told Quick that he won’t make any commentary related to the markets, the economy or tariffs between now and Berkshire’s annual meeting on May 3.
‘A tax on goods’
While Buffett hasn’t spoken about this week’s imposition of sweeping tariffs from the Trump administration, his view on such things has pretty much always been negative. Just in March, the Berkshire CEO and chairman called tariffs “an act of war, to some degree.”
“Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay ’em!” Buffett said in the news interview with a laugh. “And then what? You always have to ask that question in economics. You always say, ‘And then what?'”
During Trump’s first term, Buffett opined at length in 2018 and 2019 about the trade conflicts that erupted, warning that the Republican’s aggressive moves could cause negative consequences globally.
“If we actually have a trade war, it will be bad for the whole world … everything intersects in the world,” Buffett said in a CNBC interview in 2019. “A world that adjusts to something very close to free trade … more people will live better than in a world with significant tariffs and shifting tariffs over time.”
Buffett has been in a defensive mode over the past year as he rapidly dumped stocks and raised a record amount of cash exceeding $300 billion. His conglomerate has a big U.S. focus and has large businesses in insurance, railroads, manufacturing, energy and retail.
IRS employee union requests emergency relief
Estate planning for the Tax Cuts and Jobs Act expiration
As recession risk jumps, top financial pros share their best advice
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Economics1 week agoPCE inflation February 2025:
-
Economics1 week agoYoung Americans are losing confidence in economy, and it shows online
-
Personal Finance1 week agoStudent loans could be managed by the Small Business Administration
-
Accounting1 week agoIRS sets new initiative with banks to uncover fraud
-
Economics1 week agoWhite House denials over the Signal snafu ring hollow
-
Economics1 week agoConsumer sentiment worsens as inflation fears grow, University of Michigan survey shows
-
Economics1 week agoTexas troopers are in more and more lethal car chases
-
Personal Finance1 week agoMillions of student loan borrowers past-due after bills restarted: Fed