Fed Chair Powell remains noncommittal on future interest rate hike plans

Yahoo Finance Live's Seana Smith and Dave Briggs monitor market movements following Fed Chair Jerome Powell's press conference addressing the future interest rate hikes to come in 2023.

Video transcript

[AUDIO LOGO]

JEROME POWELL: Thank you very much.

SEANA SMITH: Fed Chair Jerome Powell wrapping up his first press conference of the year. Let's take a look at how the markets are reacting to this, and still holding onto gains despite the fact that Fed Chair Powell reiterated time and time again that more increases would be necessary in order to get inflation under control.

You're looking at the Dow up 45 points, slipping back into positive territory during that press conference. S&P up just about 1%. The NASDAQ now up nearly 2%, Dave, and all this coming time and time again, Fed Chair Jay Powell saying that the risk here is just about doing too little rather than doing too much and saying that more increases are certainly necessary at this time.

DAVE BRIGGS: Largely speaking, very similar to prior speeches, almost word for word. As he just reiterated there, they have taken COVID out. They no longer think it is a serious impact on the economy. But with the exception of that and saying, really making clear that they have to raise the debt ceiling, this is largely the same speech we have heard going back a couple of Fed meetings now.

And look, this is an economic Rorschach test. The markets see what they want to see, and they see a butterfly in that speech. I think a lot of people might see a bat. I hear what you heard, that it sounds in all likelihood-- although he punted, largely speaking, on keeping in the language of ongoing increase.

He was asked twice to confirm if that meant multiple increases are still coming after this 25-point hike, which, by the way, is the eighth in the last year. He punted twice on saying whether or not there would be multiple coming. I don't know-- what to you is raising? Let's just look at the NASDAQ, most sensitive to interest rates. What to you is justifying a 2% increase?

SEANA SMITH: I think that he--

DAVE BRIGGS: I can't find any worse.

SEANA SMITH: I think that he left the door open. He wasn't committal just in terms of how aggressive the Fed was going to get. And this is what-- like you were saying, it's certainly similar to what we've seen in the last couple of Fed decisions, the last couple of conferences. The markets hear what they want to hear. And they hang on to any--

DAVE BRIGGS: See what they want to see.

SEANA SMITH: --sort of optimism. And we're seeing that playing out in the markets again today. Some comments about the jobs market really stuck out to me, just in terms of what exactly needs to happen. Powell saying that the labor market is still extremely tight, and he was saying that there are some signs of improvement. That labor cost report that we got out earlier this week-- he called that, quote, "constructive."

But he did remain the fact that maybe we could see improvement in inflation, inflation easing without massive destruction here in the labor market, something he's reiterated time and time again.

DAVE BRIGGS: On the flip side of what you're seeing in the markets, this stands out to me. We will need substantially more evidence to begin cutting, substantially more evidence. He added, the risk to them-- and he has reiterated this for several meetings now. The risk, to Jerome Powell, is doing too little. And he's been very clear they'd rather overdo it than underdo it when it comes to these increases.

A lot of work left to do, and we don't see disinflation in that services ex-housing sector, and that is why they will continue to hike. And look, sounds to me, to one person, like there are two more increases. But the markets don't hear that.

SEANA SMITH: Yeah, the markets don't hear that. They don't want to hear that. Powell saying that the global picture is improving a bit. Inflation comes down. Sentiment, he says, is going to improve.