“Everything comes in suggesting that this year starts off on a solid footing for growth”: Powell in the press conference.
By Wolf Richter for WOLF STREET.
The FOMC voted today to leave the Fed’s five policy rates unchanged, as widely telegraphed, despite enormous pressure by Trump to cut by a lot, after three rate cuts in a row in 2025 of 75 basis points combined, and after cutting by 100 basis points in 2024.
There were 2 dissenters of the 12 voting FOMC members, Stephen Miran and Christopher Waller, who wanted a 25-basis point cut. Waller also wanted to be Fed chair. These dissents that have been piling up at recent meetings are a breath of fresh air.
The statement, in a hawkish turn, shifted away from worries about the economy and the labor market, sees the economic growth now as “solid,” up from “moderate” at the December meeting, and undid the “shift in the balance of risks” at the December meeting where it had begun to seriously worry about the labor market. That’s no longer the case.
At the press conference, Powell added: “If you look at the incoming data since the last meeting, … everything comes in suggesting that this year starts off on a solid footing for growth.”
The FOMC left its five policy rates unchanged today:
- Target range for the federal funds rate: 3.5%-3.75%.
- Interest it pays the banks on reserve balances (IORB): 3.65%.
- Interest it pays on overnight Reverse Repos (ON RRPs): 3.50%
- Interest it charges on overnight Repos at its Standing Repo Facility (SRF): 3.75%.
- Interest it charges banks to borrow at the “Discount Window” at 3.75%.
Major changes in the statement:
The statement shifted away from worries about the economy and labor market in several places:
New: “The Committee is attentive to the risks to both sides of its dual mandate” (deleted the reference to rising “downside risks to employment”).
Old: “The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”
New: “In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 3‑1/2 to 3‑3/4 percent.” Deleted “in light of the shift in the balance of risks….”
Old: “In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3 3/4 percent.”
Deleted the entire paragraph from the December statement: “The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis.” This has already been implemented.
This was a no-dot-plot meeting – one of the four a year when the FOMC does not release a “Summary of Economic Projections,” which includes the “dot plot” that indicates how each FOMC member that day sees the development of future policy rates, inflation, GDP growth, and unemployment. The FOMC will release the next Summary of Economic Projections at the March meeting.
The whole statement:
Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 3‑1/2 to 3‑3/4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Beth M. Hammack; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Anna Paulson. Voting against this action were Stephen I. Miran and Christopher J. Waller, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting
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“Fed Refuses to Cut, Shifts Hawkish in the Statement”
Yet gold and metals surging. Way too much liquidity in the system, with speculation run amok. The FED never should have cut rates.
Watch Chris’ video (Technical Traders) posted just above the comments. They’re big gold bugs, and they’re taking profits at this point.
It’s a classic gold and silver mania. People make lots of money trading this.
It’s not classic, it represents the repudiation of the US $.
This is the third one in my adult life. The prior two manias imploded just fine.
It really doesn’t. You’ll know when the world turns its back on the dollar and it won’t look like anything we’ve seen in our lifetimes.
Gold priced in almost every other major currency is doing the same thing. Is that a repudiation of all of their currencies too?
Gold priced in S&P500 shares is no where near its post-gold-standard high, and is pretty close to its average.
I agree, this is different. Especially, when you consider the rate China is pulling in so much supply, coupled with geo-political instability and MANY other factors. Is it a bubble? Probably, but maybe a sign of a commodity super cycle that was over due.
Gold is a miniscule little fungible commodity of zero financial relevance and is worth less than 1% of all global assets. There is no ‘repudiation of the US Dollar’ which is what is used to settle around 80% of all global transactions. Gold buggies just created the biggest pending crash of all time based on nothing. Hope you all are happy!
That’s a bold statement to make about so many sovereign gold buyers. You really think these countries are looking for a peak price in which to sell their massive holdings?
Who was buying lots of gold was crypto outfit Tether. Made a big deal out of announcing it too. None of the big central banks bought gold.
It seems more related to turning fiat currency into toilet paper and furnace fuel. The FED and politicians destroyed the system. At the rate they are going parabolic, it suggests hyperinflation fears.
Did crypto butt coin being worth 100 billion, meme stocks 100x in a week, and NFT .jpgs selling for 25 million suggest hyperinflation? Gold is just something else to trade and make money these days. It will come down like the rest of them.
Dollar rose today.
The dollar fell more yesterday, against most major currencies. It is at 4 year low. Against gold, it dropped—wait for it—28% in January alone. It even dropped against Canadian rupee.
Yes the dollar fell 10% this year… to the level it was at for the entire 2015-2022 time period. Which was 20% higher than the dollar was from 2004-2014.
Does no one here no how to read a chart?
FTLOG, there is no imminent danger of hyperinflation in the US! Indeed, the US has never experienced hyperinflation in its history.
What it not only suggest but firmly confirms is insane gold buggie speculative mania in the hope and dreams of making fast bucks in US Dollars. Watch out below for the gold dump!
“None of the big central banks bought gold.”
except for the Chinese bank
There is a lot of talk about CB’s adding gold reserves recently. True? False? No one actually knows?
None of the big central banks bought gold. Tether, the crypto outfit, bought lots of gold.
The confusion is that the value of CBs reserves increased because the gold price increased, not because they bought more.
Poland added the most gold, I believe. So if you map macroeconomic conditions based on the CB moves of Poland you’re onto something …
Or – OR – Gold is the new digital gold, and this is where the BTC liquidity went…
Who could possibly know?
Notably, activity has been concentrated in:
The National Bank of Poland bought 12t this month, continuing its buying streak since October. The purchase lifted its gold reserves to 543t, or almost 28% of total reserves at end-November prices.2
The Central Bank of Brazil bought gold for the third consecutive month, adding 11t in November. The central bank has purchased 43t over the last three months, bringing its total gold reserves to 172 tonnes, or 6% of its total reserves.
The Central Bank of Uzbekistan (10t), National Bank of Kazakhstan (8t), the National Bank of the Kyrgyz Republic (2t), Czech National Bank (2t), the People’s Bank of China (1t) and Bank Indonesia (1t) were also buyers in November.
Net sellers during the month were the Central Bank of Jordan (2t) and the Qatar Central Bank (1t).
Also in November, the Bank of Tanzania stated it had accumulated 15 tonnes of refined monetary gold in the first year of its Domestic Gold Purchase Programme, as part of efforts to strengthen its foreign reserves.
From the world gold council
Yes, “the Fed never should have cut rates”.
The Fed made this mess, and they have to fix it, by adjusting rates to the expectations of the market over the last 10-15 years.
Powell needs to be removed from office and any one of the other directors that side with him.
Powell at the press conference:
“So, essentially the economy has once again surprised us with its strength. Not for the first time.”
“It is just the consumer is filling out surveys that sound really negative, not spending. So, there has been a disconnect for some time between downbeat surveys, and reasonable good spending data.”
We know the consumer isn’t poor, because we know what they spend their money on… Ulta Beauty as it turns out.
I told my wife if we spent her cosmetic restricted cash outflows on savings accounts for the kids we wouldn’t have to worry about paying for College – and she beat the crap out of me! (jk… no need to send help, just be forewarned about this discussion; if you’re going to have it wear pads and a helmet)
You must be a newling in this marriage business 🤣
eBay sells all the ulta stuff new for cheaper.
No fun shopping experience tho
Wolf, thanks for such a quick update on the FED’s statements. Truly valuable. I know that the rate decision was mostly expected, but still seems significant. I don’t know if the FED is data driven or not, but I think it was the right decision.
I noticed headlines the other day to the effect: “Home prices surge as Mrtg rates tumble” – referring to last month I think. Housing affordability will best be achieved by keeping Mrtg rates between 6-7% for 5 years. Just my opinion.
It is interesting to see Gold (+140 today) and Silver rising apparently detached from interest rate news. 1 hour to market close, maybe PM’s will fade into the close on the news…but the PM story seems to be detaching from interest rates and signaling something else.
BTC is subdued. If BTC is just a leveraged bet on Tech and if tech likes declining rates, we should see BTC fade over the next few days. I don’t know. Maybe it doesnt matter but it feeds the debate about just what BTC is.
Home prices did NOT surge “last month.”
Home prices were roughly flat year-over-year last month. Not seasonally adjusted: -0.3%. Seasonally adjusted: +0.2%:
I was citing Headlines, not facts – I didnt even read the article. I commented on it because the conventional wisdom is that lower rates will somehow make home more affordable. I think the opposite is true at this point.
I also don’t think the “mrtg rates tumble” part of the headline was true – 25 or 50BPS one way or the other is not a tumble or a surge.
This is why I appreciate your site so much. Always good, grounded commentary. Even at times when I might disagree Wolfstreet is “must read” – both articles and comments.
That’s an interesting graph. Three years of housing doing its best not to show a real downward trend. That’s what 10 years of near zero ZIRP & $2.7T in MBS will do to housing. While history shown that the average home loan is about 7 years, I firmly believe this is on the verge of doubling. Everyone yammers about this is that, whether that’s more supply or finagling rates low, but I don’t see a return to the mean outside of a healthy sized recession. And nobody in the press or DC wants to admit this. It’s runner up to kicking the national debt can down the road.
Your move Mad King, let’s see what kind of crazy attack and investigation will come out of this hawkish stand and if they do end up pausing…ordering my popcorn now…
“There were 2 dissenters of the 12 voting FOMC members, Stephen Miran and Christopher Waller, who wanted a 25-basis point cut. Waller also wanted to be Fed chair”
Somebody is really trying hard to be the next constestant to The Apprentice….Waller just couldn’t wait to kiss that ring huh?
Jay said~“Growth in labor supply has came to a halt” “demand for labor came down a similar amount” ~ my knee jerk understanding to me, this sounds like we are depositing consumers or deporting growth in the economy. We are at equilibrium now, what will it look like when equilibrium breaks?
Wolf, I think you may have mistakenly posted the FOMC statement from December.
Good lordy, thanks. That’s what I get for having both statements open side by side.
Powell has lost control of the money stock. He needs to raise policy rates. But that will crash stocks.
These guys just matriculated at the wrong universities.
From the standpoint of the universal payment’s system, every time a DFI makes a loan to, or buys securities from, the non-bank public, it creates new money – demand deposits, somewhere in the system. I.e., deposits are the result of lending and not the other way around.
Almost as fickle as the weather in Vermont. Yet a bit more chilling. 🥶
Question does the FOMC ever change some of the five policy rates? Or is it always all or nothing?
It occasionally makes a “technical adjustment” to the ON RRP rate by raising it or lowering it by 5 basis points, usually at a meeting when it keeps the other four rates unchanged.
It also raised the repo rate in about May 2020 (before there was an SRF), which caused repo usage to go back to zero in May and June 2020 and stay there.
Gold up $250 at 2:32.
Once oil does what silver and gold did, today’s inflation will be just a blip.
So why hasn’t it already? Gold and silver spiked but oil prices are down 15% this year and right at historical averages
Mr. Wolf writes: “…sees the economic growth now as “solid,” up from “moderate” at the December…”
This economic growth is partially attributed to AI that does have promise, but not in the way it has been projected. The real near term application that will drive GDP would be AI for the “companionship” industry.
Money & Banking 101. Too much money chasing goods & services.
Funded nearly $40 trillion treasury debt with fiat money and monetization of that debt.
This story will not end well. Listen to Ray Dalio’s speech at the WEF last week. Also his book & recent letter.
There are 12 voting members of the Federal Reserve FOMC (Federal Open Market Committee). As Wolf stated very clearly, only 2 of the 12 voting members wanted to lower the 5 rates set by the Federal Reserve, so changing the Chairman from Jerome Powell would make absolutely no difference at all as to interest rate policy or rates.
Dalio has been predicting the end of the universe for well over three years now. It’s a marketing schtick to freak out potential clients with more wealth than brains and convince them that he’s their savior.
It’s the purple revolution.
The statement sounded hawkish but certain comments in the interview sounded dovish to me at least.
He seemed to almost laugh at the idea of raising and rates (not that it’s currently needed but if inflation picks up we would) and seemed to imply there’d be reasons to lower in the second half of the year. He also seemed unconcerned about the 10 year saying the fed funds rate doesn’t impact that much, govt policy does. And lastly when asked about the K shaped economy he didn’t seem to find it problematic that the top half is the only people benefiting from this economic situation that he created by leaving rates at 0% through 2021 and didn’t acknowledge that the bottom half still thinks there’s inflation and is cited by Walmart as trading down in quality/brands to get by.
Powell can’t really give a honest opinion about the 10 year. Bessent would freak out! Powell has to talk up the nations book, the problem is manageable today but if we don’t change course we are screwed. The world knows we are not changing course. Sovereign. Debt is a circular jerk off with other nations. similar to the circular AI investment one AI company makes with the other Ai company The problem is if other nations stop participating in the circular refinancing of our debt or if the ROW slowly carves us out incrementally. If The $usd drop continues it will trigger stop loss in usd assets.
For instance SPY are up 16.39% YOY but the euro dollar is up 15.6% YOY after todays drop in the euro. The European who bought the spy a year ago have barely a return when converted back to their currency they are up 20% in the $dax. The stop loss trigger is close if the USD keeps falling, really close, the Europeans who bought the 10 ust bond have a giant loss! It may be Hedged but it’s still a loss outright. The value of the dollar is important to capital flow and it looks like capital is still leaving the dollar as a store of value.
Clarification $dax is up 15.83% YOY in real gains priced in Euros. I was too lazy to look it up earlier. If the $usdjpy gets below its 200 DMA around 149.89 that’s when global de-leveraging of risk takes off. Bessent tried to jawbone the $usdjpy higher today or yen lower. It looks like his words ran out of steam around 2pm eastern today.
“The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”
Are you sure about that?! Are you sure???
Where did the “soft landing” talk go?
And who gets hurt when the dollar, in one year, loses between 16% and 19% to the Peso, Euro and the Swiss Franc?
add in how many consecutive months over the “target”?
Dollar is higher than it was during a big part of the past 50 years.
The latest H.4.! release shows the FED is tightening reserves.
https://www.federalreserve.gov/releases/h41/current/default.htm
Miran only wanted 25 basis points? That’s not going to go over well.
Yeah, I thought so too. But maybe they were looking at some really strong data that the Fed staff handed them, and even he backed off.
Gold reminds me of Jan 1982, where reserves peaked and gold subsequently fell.
Gold continued up after the announcement. + 243 is the quote just now. Silver +4.75.
I can’t agree with your description of it as “Maniia”. There seems very little participation in the US. Just survey the commenters here and see how many are moving new money into Gold, or have existing positions in Gold I’ll bet it’s near 0 for the former and just a few for the latter ?
Some inflows into Gold ETF’s, All the chart readers and technical traders say sell, sell, sell. But it’s possible that the Barbaric Relic has found a new home in certain CB thinking as a useful Neutral Reserve Asset.
Silver ? The Silver story could have a greater mania component
Tether CEO is saying they hold 140 Tons and are buying 2 tons per week…believe him or not.
I don’t know, every week as it reaches a new handle I expect the normal selloff and test, but for January, thats a negative. It’s possible price setting was move to the FAR EAST.
I really am more interested in what it means. Mania or signal of change.
Tether, the crypto outfit, bought a HUGE amount of gold. Made a big deal out of announcing it too. Nothing to do with central banks.
I have think they know what happened to the Hunt brothers.
The FED Agenda:
“The original Taylor rule prescribes a target of 3.94% and a modified Taylor rule prescribes a target of 4.00%”
Yep. They keep pretty closely to the Taylor rule (especially since the one time they were a year late to respond resulted in the post COVID inflation). It’s been very good at keeping inflation near target.
Gold is going crazy now, if it reaches $6250 that would be $100,000 a pound (!!!)
Aren’t there 12 Troy oz to the pound?
14.6, so $6850 for troy ounces. I was being a bit facetious. This type of action looks like a top may be near.
There are 12 troy ounces per troy pound. As a metalllurgist at three gold mines I never heard troy pounds being refered to. There are 14.583333…. troy ounces per avoidopois (sp?) pound.
avoirdupois = goods/asset of weight
All unrealized profits unless it is sold.
The gold ETF (GLD) closed $494, hit $513 after hours, now $504.
Incredible volatility.
Bored Ape Yacht Club NFTs are a bargain right now outside of the special ones. $18K or so and nowhere to go but up. Those assets are due for a run up. Get yourself a Crypto Wallet and get in the game!
Time to sell the heirloom sterling it appears. Manias are fun.
Have a Bicentennial collection of original Thirteen Colonies silverplate spoons. Maybe i should put on the market.
What is the real unemployment rate? Did you all see the headlines of layoffs in 2026?
I want Americans to have jobs to live, spend, and buy stocks. My stocks would be worthless if there is no buyer, correct?
In two years, 2020 and 2021, the number of employees at Amazon DOUBLED, went from 800,000 to 1.6 million. Amazon overhired. Then they tried to cut out the fat with a series of huge layoff announcements GLOBALLY (some in the US, some in other countries). So we don’t know many layoffs actually took place, and in what countries those layoffs actually took place. And while they laid off through the left door, they hired through the right door, and the number of employees barely dipped and then rose again.
That’s why layoff announcements are meaningless in terms of US employment. They’re also corporate propaganda to cow their workforce into submission so that they quit asking for raises.
Data through 2024. When Amazon files its annual 10-k report for 2025, I’ll update this chart. Google has a similar looking chart.
I agree with you that companies did over hiring. This is what I got from CoPilot. To me only U-6 number is meaningful.
Current U.S. Unemployment Snapshot
– National unemployment rate: 4.4% (Dec 2025)
– Trend: Slightly higher than a year earlier (+0.3 percentage points).
– Labor force participation: 62.4% (Dec 2025).
– Broader U‑6 unemployment: 8.4% (Dec 2025), includes discouraged workers and involuntary part‑time workers
If U6 is the only thing you care about, then you should know that its very near its all time low and has only very rarely been lower than it is right now.
1. U-6 includes all those employed part-time for economic reasons. So these people have jobs but aren’t getting the hours they want (big problem in the restaurant business with shift work and shitty schedules).
2. It includes people who’ve essentially stopped looking for a job but would like a job if someone handed them a job.
3. So U-6 doesn’t really measure unemployment. It measures a broader concept of frustration with the job market.
4. look on a long-term chart. They came up with U-6 in the mid-1990s. So it doesn’t go back to the 1970s or 1980s when U-2 topped out at 11% and stayed high until the mid-1990s. In the 30 years that U-6 has existed, it spent the vast majority of the time ABOVE 8.4%. That’s not a bad number for U-6. the lowest it ever got in its history was 6.6% for two months, in Dec 2022 and April 2023 during the labor shortages.
Japan, Taiwan, South Korea, and China have industrial policy that helped their economies to become value-added high-tech economies. Meanwhile, we are outsourcing many jobs to other countries like India for example. India has 1.6 billion people. We can outsource all 350 million American jobs and still won’t be enough for them. What’s about us, the USA?
Dollar debasement is basically being pushed by influencers to push gold and crypto. Take your profits and run while you can like Wolf says.
Have you looked at Wolf’s 50-year dollar value graph, above?
That chart does give me a better outlook. After 1929 many properties were sold by the county for delinquent RE taxes. When the crash occurs hopefully fiat money will pay the taxes.
Have a collection of silver coins but don’t believe the price is stable.
I quoted:
‘For the first time in three decades, the total value of gold held by foreign official institutions (~$4.05 Trillion) has overtaken their total holdings of US Treasuries (~$3.91 Trillion).
This is not a “bull market” in the traditional sense; it is a mass migration of capital. Central banks are no longer buying gold for its yield—which is
zero—but for its lack of counterparty risk. In an era where US Treasuries are increasingly viewed as “political debt,” gold has reclaimed its throne as the only asset that is not someone else’s liability.’
No, this has been caused by them writing up the value of their gold holdings (mark to market). The ECB does that too. It has not bought any gold at all in God knows how many years, but it marks to market its gold holdings every quarter. So when the value of gold triples, its holdings triple, without it buying a single troy ounce. Nor did it sell gold when its holdings fells.
We discussed that here:
https://wolfstreet.com/2025/10/08/ecbs-qt-has-knocked-e3-28-trillion-off-its-balance-sheet-far-more-than-the-feds-qt-and-accelerated-qt-further-this-year/
If you want to look at the quantity of gold they hold/add, you need to look at tonnes.
Due to price increase only, no gold purchased during the time of the chart:
Responding to all the dollar weakness talk, local currency bonds are one way to play the downward trend. There are a few ETFs for this (e.g. LEMB for emerging markets and IGOV or ISHG for developed markets).
How would Fed Fund rate cuts help employment, anyway? If hiring is “on hold” at business establishments because they want a better understanding of how AI is going to affect staffing needs, rates can go up or down without affecting that uncertainty. Furthermore, the assumption of “high growth” implies higer profitability, and hence lower sensitivity to interest rates. If anything, “high growth” is inflationary, and the “animal spirits” will more likely need to be calmed with rate hikes. Look no further than the price of electricity, the price of computer memory, and the price of industrial metals to see that these costs are going to feed through into future inflation for a wide array of goods.