Live updates: Fed decision May 2023

The major averages turned lower following Fed Chair Jerome Powell’s press conference.

Investors seemed to have turned their attention to Powell’s comment that the rate-setting committee has “a view that inflation is going to come down not so quickly.”

“It will take some time, and in that world, if that forecast is broadly right, it would not be appropriate to cut rates and we won’t cut rates,” he said.

As of 3:45 p.m., the Dow Jones Industrial Average was down 245 points, the Nasdaq was lower by about 0.3% and the S&P 500 was down 0.5%.

–Darla Mercado

If Federal Reserve members are correct, it may take some time for rate cuts to seem plausible, said Chair Jerome Powell.

“We on the committee have a view that inflation is going to come down not so quickly,” he said. “It will take some time, and in that world, if that forecast is broadly right, it would not be appropriate to cut rates and we won’t cut rates.”

He added that demand and labor market conditions will likely need to weaken some more to see progress within non-housing services and deem rate cuts “appropriate.”

— Samantha Subin

The initial signs of weakness in the labor market suggest that the path to a “soft landing” for the U.S. economy is not off the table, Fed Chair Jerome Powell said.

“There are no promises in this, but it just seems to me that it’s possible that we can continue to have a cooling in the labor market labor market without the big increases in unemployment that have gone with many prior episodes,” Powell said.

“Wage increases have been moving down, and that’s a good sign. Down to more sustainable levels. … I think the case of avoiding a recession is in my view more likely than that of having a recession,” he added.

— Jesse Pound

Federal Reserve Chair Jerome Powell thinks that more data is needed to decide if the fed funds rate is restrictive enough.

“We’re going to need data to accumulate on that, [that’s] not an assessment that we’ve made that would mean we’ve reached that point,” he said. “I think it’s not possible to say that with confidence now.”

Powell said that the summary of economic projections from the Fed’s March FOMC meeting showed that decisions made up until that point in time had resulted in an appropriate level of rate increases. Powell says the committee will reassess the notion in June.

— Brian Evans

Federal Reserve Chair Jerome Powell called JPMorgan’s acquisition of First Republic an “exception,” during a press conference Wednesday.

“I think it’s probably good policy that we don’t want the largest banks doing big acquisitions,” he said. “That is the policy, but this is an exception for a failing bank and I think it’s actually a good outcome for the banking system.”

Another regional bank purchasing First Republic would have also been a good outcome, he added.

Powell also said he does not have an “agenda” to continue consolidating banks, adding that he sees value in having banks of different sizes within the system accomplishing different goals.

— Samantha Subin

Federal Reserve chair Jerome Powell said on Wednesday that while inflation has improved over the last year, the fight to tame price pressures is far from over.

“Inflation remains well above our longer run goal of 2%,” Powell said. “Inflation has moderated somewhat since the middle of last year, nonetheless inflation pressures continue to run high and the process of getting inflation back down to 2% has a long way to go.”

Powell added that expectations for long-term inflation remain “well anchored,” and that the central bank remains focused on promoting maximum employment and strengthening purchasing power.

— Brian Evans

Halting rate hikes may be…