At 14:30 EDT (18:30 UTC) on Wednesday (June 10), Federal Reserve Chair Jerome Powell delivered his remarks about the Fed's monetary policy at a press conference following the conclusion of a two-day meeting of the Federal Open Market Committee (FOMC).
30 minutes before the start of the press conferrence, the Fed issued a statement (in the form of a press release) from the FOMC.
Here were the key highlights:
- "The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals."
- "... the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent" and "expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals."
- "In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective."
- "To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions."
The Fed also released a table that showed a "Summary of Economic Projections to be released with the FOMC minutes."
According to this table, here are the median projected figures for 2020, 2021, 2022, and beyond for "Change in real GDP", "Unemployment rate", "PCE inflation", "Core PCE Inflation", and "Federal funds rate":
- Change in real GDP: -6.5%; 5.0%; 3.5%; 1.8%
- Unemployment rate: 9.3%; 6.5%; 5.5%; 4.1%
- PCE inflation: 0.8%; 1.6%; 1.7%; 2.0%
- Core PCE inflation: 1.0%; 1.5%; 1.7%
- Federal Funds Rate: 0.10%; 0.10%; 0.10%; 2.5%
As for the FOMC press conference itself, it started with Fed Chair Powell delivering some prepared remarks, a few interesting highlights of which are listed below:
- "... the decline in real GDP in the current quarter is likely to be the most severe on record."
- "Even after the unexpectedly positive May employment report, nearly 20 million jobs have been lost on net since February, and the unemployment rate has risen about 10 percentage points, to 13.3 percent."
- "Weak demand, especially in sectors most affected by the pandemic, is holding down consumer prices. As a result, inflation has fallen well below our symmetric 2 percent objective."
- "In March, we quickly lowered our policy interest rate to near zero, where we expect to keep it until we are confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals."
- "We are committed to using our full range of tools to support the economy and to help assure that the recovery from this difficult period will be as robust as possible."
Powell then started to take questions from reporters. MarketWatch provided a live blog of this event.
Below, we look at some of the most interesting comments made by Powell whilst answering questions:
- "We're not thinking about raising rates, we're not even thinking about thinking about raising rates."
- "We've got to get those people back to work... We're going to stick with this until it's done."
- "We want the markets to be working; we're not looking for a particular level... If we were to hold back because we think asset prices are too high, what would happen with those people we are supposed to be serving?"
- "Fed would never hold back support for economy because it thinks asset prices are too high. Popping asset bubble would hurt job-seekers."
According to data from CryptoCompare, within 10 minutes of the start of the FOMC press conference, Bitcoin had surged to $9,978; currently (as of 21:17 UTC on June 10), Bitcoin is trading at $9,864, up 0.64% in the past 24-hour period:
Tushar Jain, Managing Partner at crypto-focused investment firm Multicoin Capital, had this to say about today's press conference:
Jerome Powell said today: "Fed Would Never Hold Back Support For Economy Because It Thinks Asset Prices Are Too High"— Tushar Jain (@TusharJain_) June 10, 2020
Reminds me of an old Soros quote: "When I see a bubble forming, I rush in to buy, adding fuel to the fire"
This upcoming bubble is going to make 1999 look tame.