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No one expected Jay Powell & co. to raise interest rates yesterday. And, indeed, they did not. Still, the non-move managed to both surprise (again) and anger people, and most especially the person who has both made his distaste for Fed rate hikes particularly clear, and who is also quite quick to anger. For while Jay Powell is still working on his Fedspeak, he is still nonpareil in pissing off the president of the United States, even while doing what the president wants him to do, or, rather, not do.

The Federal Reserve said Wednesday that the United States economy was slowing more than it had previously thought and painted a far less rosy economic picture than the White House as it left interest rates unchanged and signaled little appetite for raising them again in the near future…. The downbeat assessment comes as the Fed sees signs of weakness in areas like consumer spending and business investment, which Mr. Powell said “suggest that growth is slowing somewhat more than expected.” Average monthly job growth, while strong, “appears to have stepped down from last year’s strong pace,” he added.

This is not at all what Donald Trump is hearing from whoever it is he hears things from. And it’s not at all what banks—among the few entities who actually liked Powell’s rate trajectoryor their investors want to hear, either.

Shares of JPMorgan Chase & Co., Wells Fargo & Co., Bank of America Corp. and Citigroup Inc. all slipped more than 1% in midday trading. Losses also spread to European banks, with Barclays PLC and Royal Bank of Scotland PLC dropping at least 1.7% each…. Banks are among the most economically sensitive stocks and typically reflect investors’ outlook for the broader U.S. economy. If the declines continue, it could spell further trouble for global growth…. “The Fed has made it quite clear that they’re going to reduce their balance sheet, which means they’re going to be buying less bonds, which will have a negative drag on the banks.”

Fed, Dimming Its Economic Outlook, Predicts No Rate Increases This Year [NYT]
Bank Stocks Slump on Revived Global Growth Worries [WSJ]
Trump finally got his wish from the Fed, but not for the reasons he wanted [CNBC]



Jay Powell Has It Hard Enough, You Guys

He does not need to see 9.25% repo rates right now.

Michael Vadon [CC BY-SA 4.0], via Wikimedia Commons

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