Fed Chair Powell Says Long-Run Neutral Rate Of Interest Is Theoretical; People Are Coming To The View That Rates Are Less Likely To Go Back Down To Pre-Pandemic Levels; Policy Is Restrictive; Question Of Neutral Rate Is The One Everyone Is Asking; The Question Of Whether It's Restrictive Enough Will Be Answered Over Time; Evidence Is Pretty Clear Though That Policy Is Currently Restrictive And Having Impact We Hoped For
Portfolio Pulse from Benzinga Newsdesk
Fed Chair Powell stated that the long-run neutral rate of interest is theoretical and that rates are less likely to return to pre-pandemic levels. He emphasized that current policy is restrictive and is having the intended impact.
June 12, 2024 | 6:53 pm
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NEGATIVE IMPACT
Fed Chair Powell's comments suggest that interest rates are likely to remain higher for longer, which could impact the broader market represented by SPY. The restrictive policy is currently having the intended effect.
Higher interest rates generally lead to lower stock prices as borrowing costs increase and economic growth slows. SPY, representing the S&P 500, is likely to be negatively impacted in the short term.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 80