The Fed Stays Put

By Alex Eule |  Wednesday, April 28 The Fed Stays Put. The Federal Reserve just finished its two-day policy meeting so it had no choice but to issue some sort of statement. It changed as little as possible. The Fed is keeping its zero-rate interest policy in place and will continue its $120 billion worth of monthly bond purchases. Not surprisingly, the status quo left stocks relatively flat. The S&P 500 finished the day down less than 4 points, or 0.08%. Federal Reserve Chairman Jerome Powell continued to hold the line around inflation, as well. He acknowledged that prices were rising, while seeming nonplussed about it all. Here's one telling highlight from his press conference this afternoon:  We are also likely to see upward pressure on prices from the rebound in spending as the economy continues to reopen, particularly if supply bottlenecks limit how quickly production can respond in the near term. However, these one-time increases in prices are likely to have only transitory effects on inflation. Powell said the Fed planned to keep its target range for interest rates at zero to 0.25 percent until maximum employment is reached and "inflation is on track to moderately exceed 2 percent for some time. I would note that a transitory rise in inflation above 2 percent this year would not meet this standard." Investors haven't been nearly as nonchalant, of course, evidenced by much of the stock market's selloff in response to rising yields earlier this year. But no one can argue that Powell and the Fed haven't been clear about their intentions.  "The Fed remains patient by looking for actual confirmation, rather than forecasted confirmation, that the labor market will fully recover," Charlie Ripley, senior investment strategist for Allianz Investment Management, wrote tonight. "This meeting was simply a message to market participants to sit back and observe as the economic recovery continues to unfold." Alexandra Scaggs has more on the Fed's announcement on Barrons.com.  Shortly after Powell's comments, earnings took center stage ... again. Apple and Facebook both easily beat Wall Street estimates and their stocks were trading higher in after-hours trading. Qualcomm, Ford Motor, eBay, and Teladoc also reported tonight. Barron's has coverage on the big night of earnings here.  By tomorrow, investors will have additional news to digest. President Joe Biden addresses a joint session of Congress beginning at 9 p.m. Eastern time tonight.

 

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