The news at a glance
Markets: Will the Fed change direction?
Investors are betting that slowed growth will keep the Federal Reserve from boosting interest rates, said Daniel Kruger and Nick Timiraos in The Wall Street Journal. Last week Fed-funds futures showed a 91 percent probability that 2019 will end with rates at or below their current level—a sharp reversal from November, when investors overwhelmingly expected rate increases. It’s a “sign of fading confidence” that economic growth will meet the 2.3 percent rate Fed officials were expecting. The Fed raised rates last month and has projected two more increases for 2019, but chairman Jay Powell has told investors that “the Fed’s policy isn’t on a fixed course.” The Fed chairman has “lost his way,” said Dion Rabouin in Axios.com. After reversing his previous message that the Fed would stick to its plans and not get pushed around by stock market fluctuations, “Powell has lost credibility in the eyes of many market watchers.” Trying to dodge a fight with President Trump and the stock market has “gone predictably awry.” Instead of relying on the Fed to follow a consistent, well-defined policy, markets “will be fully on edge and ready to dissect his every word.” That’s exactly what Powell didn’t want, and the Fed whiplash could end with stocks getting hammered.
Powell: Credibility at stake