A trader reacts as a screen displays the Fed rate announcement on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 13, 2023.
Brendan Mcdermid | Reuters
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
The bottom line
No news is, perhaps, good news as far as Wall Street is concerned.
Fed Chair Jerome Powell stuck closely to script in the first of two Capitol Hill appearances this week.
In prepared remarks, he told lawmakers the Fed expects to cut rates this year in order to avoid unnecessarily constraining growth. But he also noted progress toward hitting the Fed’s 2% inflation goal wasn’t “assured.”
“Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy,” Powell said. “At the same time, reducing policy restraint too late or too little could unduly weaken economic activity and employment.”
Investors are keeping a close watch on the Fed chief’s comments to get more clarity on the central bank’s timing for rate cuts.
“The waiting game continues. Everything else in the written testimony is boilerplate about progress on inflation over the past year and the strength of the labor market,” wrote Ian Shepherdson chairman and chief economist at Pantheon Macroeconomics. “In short, no surprises, no news.”
Mohamed El-Erian, Allianz chief economic advisor posted on X, that Powell “is facing some quite aggressive Congressional questioning on the impact of high rates … His response is, understandably, to repeatedly refer back to the inflation mandate.”
“The situation would have been less uncomfortable for the Fed had it not mischaracterized the inflation problem for so long in 2021, been so late in its policy response,” he added.
“Therefore, had to hike rates aggressively and to a higher level than would have been otherwise necessary.”