Market Quote: The U.S. Federal Reserve’s Latest Decision…and Future Fate?
Author: The editor's desk
May 1, 2024
A mid-week analysis of what’s happening in global financial markets from the perspective of AGF’s investment management team.
Middle of the (Bumpy) Road
The Federal Open Market Committee (FOMC) unsurprisingly decided to keep rates steady and announced plans to slow the balance sheet run-off starting in June. Members of the committee, which is a branch of the U.S. Federal Reserve System, showed some concern about the lack of recent progress towards the 2% inflation objective, but there was little in the statement or in U.S. Fed Chairman Jerome Powell’s press conference that the central bank was looking to change lanes and signal a “hawkish pivot”.
With recent strong inflation data and still healthy economic growth, there was some concern that the Fed would feel rates were not restrictive enough. Chair Powell pushed back on the conjecture that the next move would be a hike, calling it unlikely.
U.S. Treasury yields fell and the U.S. dollar weakened modestly after the Fed signaled they remain on the same road leading towards eventual rate cuts.
Fed Up
Donald Trump’s antipathy toward the Federal Reserve may lead to radical reforms at the central bank, the Wall Street Journal reported this weekend.
Trump allies are quietly drafting proposals that would attempt to erode the Federal Reserve’s independence if the former president wins a second term, according to the Journal’s Fed watcher, Nick Timiraos. Among Trump’s advisers, there’s a deep divide over how aggressively to challenge the central bank’s authority.
The Trump allies apparently believe that he should be consulted on interest-rate decisions. Others want to oust Jerome Powell after the election, although he might stay as a governor.
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Commentary and data sourced from Bloomberg, Reuters and other news sources unless otherwise noted. The commentaries contained herein are provided as a general source of information based on information available as of May 1, 2024 and are not intended to be comprehensive investment advice applicable to the circumstances of the individual. Every effort has been made to ensure accuracy in these commentaries at the time of publication, however, accuracy cannot be guaranteed. Market conditions may change and AGF Investments accepts no responsibility for individual investment decisions arising from the use or reliance on the information contained here.
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AGF brings a disciplined approach, focused on incorporating sound, responsible and sustainable corporate practices. The firm’s collective investment expertise, driven by its fundamental, quantitative and private investing capabilities, extends globally to a wide range of clients, from financial advisors and their clients to high-net worth and institutional investors including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
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