Fed signals 3 rate cuts still likely despite inflation uptick
Federal Reserve Bank Chair Jerome Powell takes questions from reporters about the economy Wednesday. Powell said that three interest rate cuts are possible this year.
Federal Reserve officials maintained their outlook for three interest-rate cuts this year and moved toward slowing the pace of reducing their bond holdings, suggesting they aren't alarmed by a recent uptick in inflation.
Officials decided unanimously to leave the benchmark federal funds rate in a range of 5.25% to 5.5%, the highest since 2001, for a fifth straight meeting. Policymakers signaled they remain on track to cut rates this year for the first time since March 2020, but they now see just three reductions in 2025, down from four forecast in December, based on the median projection.
Chair Jerome Powell, speaking to reporters after the Fed's decision Wednesday, demurred when asked whether officials would lower rates at their coming meetings in May or June, repeating that the first reduction would likely be “at some point this year.”
He largely shrugged off recent data showing an uptick in inflation in recent months, saying, “It is still likely in most people's view that we will achieve that confidence and there will be rate cuts.”
At the same time, he said the data supported the Fed's cautious approach to the first rate cut, and added that policymakers are still looking for more evidence that inflation is headed toward their 2% goal.
Powell also said it would be appropriate to slow the pace of the Fed's balancesheet unwind “fairly soon,” after policymakers held a discussion on their asset portfolio this week.
“The decision to slow the pace of runoff does not mean our balance sheet will shrink, but allows us to approach that ultimate level more gradually,” he said. “In particular, slowing the pace of runoff will help ensure a smooth transition, reducing the possibility of money markets experiencing stress.”
Bentley sales down because of `emotional sensitivity,' CEO says
After four consecutive years of sales growth, sales of ultra-expensive Bentley cars and SUVs were down 11% last year.
Bentley chief executive Adrian Hallmark, in a presentation to reporters, blamed “a level of emotional sensitivity” among the brand's wealthy clientele. In particular, Bentley buyers were sensitive about high interest rates, a Bentley spokesperson explained later.
Thirty percent of customers leased Bentleys last year, a figure that was “up significantly” compared to 2022, the spokesperson explained. This indicates that even rich buyers were sensitive to monthly payments on a purchased car. In general, monthly car payments have reached record levels in recent months as high interest rates attempt to ease inflation. In the fourth quarter of 2023, the average monthly payment on a new vehicle in the United States was $739 on a 68-month loan, according to Edmunds. com.
Monthly payments for cars like Bentleys, which have a sticker price of $200,000 at a minimum, can be much higher.
Apple value tumbles as regulators close in and scrutiny intensifies
Regulators on both sides of the Atlantic are training their eyes on Apple Inc., unnerving investors with fears over fines and threatening its market dominance.
In the U.S., the Justice Department and 16 attorneys general are suing the iPhone maker for violating antitrust laws. And in Europe, the company is said to be facing probes about whether it's complying with the region's Digital Markets Act.
Shares of the company slid last week, erasing about billions in market value and taking their year-to-date loss back past 11%. Once the world's most valuable firm at more than $3 trillion, Apple has underperformed both the Nasdaq 100 and the SP 500 in 2024.
It's not the first time Apple is coming under regulatory scrutiny. The company and its peers have for years faced accusations of enriching themselves by suppressing competitors. But as Apple's products have grown ever-more popular and established themselves as part of daily life around the world, authorities have also become more combative and wary of its power.
The American suit, filed Thursday in New Jersey federal court, accuses Apple of blocking rivals from accessing hardware and software features on its popular devices. The potential investigations in Europe, which are also targeting some of Apple's rivals, will focus on the firm's new fees, terms and conditions for app store developers.
QLate last month, a video game company announced that it would lay off about 5% of its staff — some 670 people. I would have expected the stock to plunge on that news, but it didn't move all that much. Why?
ALayoffs are definitely bad news for employees, but they're not necessarily bad for companies (though this stock has shed some value since you wrote).
Some layoffs occur when a company is in deep, intractable trouble, but others happen when a company reorganizes, aiming to cut costs and be more effective with fewer employees. Trimming fat can be helpful, but cut too much, and you might be cutting bone.
In general, the stock market's reaction will depend on what investors think. If they believe the move will greatly help the company, they may bid up the shares. If they see the layoffs as a bad sign, many might sell their shares.
QI'm a new investor, and I want to start buying stocks. How should I invest so that my money is safe and grows?
ATake some time to learn more about stock investing before jumping in, so that you enter the market with reasonable expectations. For starters, there will always be some risk with stocks. You can reduce it by diversifying, though. The simplest approach is just to keep adding money to one or more low-fee broad-market index funds, such as one that tracks the S&P 500, over a long period.
Understand, too, that the stock market will undergo mild or severe downturns every few years — but it has always recovered and gone on to new highs. You can learn a lot at Fool.com.
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