- On May 3, the chairman of the Fed gave a press conference
- In the article, we have collected the main topics that Powell touched on in his speech
Yesterday, May 3, Fed Chairman Jerome Powell held a press conference as part of a meeting of the Federal Open Market Committee (FOMC). Among other things, he spoke about the further policy of the regulator, what to expect in the near future and how the agency assesses the current situation in the banking segment.
The system is reliable
During speeches Powell called the US banking system “strong and stable”. According to him, after the crisis in March, the situation has improved significantly.
Interestingly, exactly on the same day, the shares of two rather large regional American banks “went to the bottom.” And one of them, PacWest, whose securities “sank” by more than 40%, can be sold at all.
Powell also stressed that the Fed is constantly monitoring the situation. But, despite the “improvement” of the situation, the chairman of the regulator considers it appropriate to review the supervision system. At the same time, the banking sector allegedly does not play a greater role in the fight against high inflation.
“Moderate” recession
In the current economic climate, the Fed predicts a minor crisis. The agency called it a “mild recession.”
“I would characterize it (the crisis) as an increase in unemployment, but incomparably smaller than during a normal recession.”
He also does not exclude that the country can avoid it. Moreover, the chances for this are allegedly higher than for the recession itself.
Recall that in recent months, well-known experts are increasingly talking about the upcoming hyperinflation in the United States. To prove this thesis, the ex-CTO of Coinbase even spent a million dollars.
Should we expect an interest rate cut?
As long as inflation is high in the country, no. The Fed will not stop tightening the screws. Recall that yesterday, May 3, the regulator again raised the interest rate by 0.25%. Another option will be considered only if the market forecast changes.
We need to raise the “ceiling” of public debt
Paeull believes that the consequences of delay in this matter will be disastrous. Recall that the Republicans oppose another increase in the “ceiling” of public debt due to economic and financial problems. The Fed does not support either side, but advocates a speedy resolution of the issue.
