Powell Says Fed Policy “In a Good Place” as Rates Stay on Hold

The Federal Reserve held its Fed Funds Target Range steady at 3.50%–3.75% in April, marking a third consecutive pause. Chair Jerome Powell underscored that policy is balanced and flexible, stressing the Fed is prepared to adjust in either direction depending on economic developments.



Powell’s Press Conference Highlights

– Inflation remains elevated, fueled by rising energy costs.

– Consumer spending is resilient, but job growth has slowed alongside softer labor demand.

– March PCE inflation came in at 3.5%, with core PCE at 3.2%.

– Short-term inflation expectations have ticked higher, while long-term expectations remain anchored near 2%.

– Powell emphasized: “We are in a good place to move in either direction.”

– Internal debate is intensifying, with more officials questioning the Fed’s easing bias.



FOMC Statement

– Rates held at 3.50%–3.75%.

– Economic activity continues to expand at a solid pace.

– Inflation pressures persist, particularly from global energy markets.

– Middle East tensions add significant uncertainty.
– Decision passed 8–4, with one call for a cut and three opposing the easing bias.


The Fed remains cautious, balancing inflation risks against labor market stability. Divisions within the Committee are widening, keeping markets alert to any shift in guidance.



Market Reaction

– The US Dollar Index (DXY) climbed toward 99.00, extending gains for a second day.

– Treasury yields rebounded across maturities, reinforcing USD strength.

– EUR/USD slipped, with resistance near 1.1800 and support around 1.1680–1.1700.



Outlook

With Powell’s term ending May 15 and Kevin Warsh expected to succeed him, investors anticipate policy continuity amid geopolitical uncertainty.

The CME FedWatch Tool shows an 80% probability of rates staying unchanged through year-end, with cuts unlikely before September unless energy prices ease.