Fed Policymakers Signal Rate Cuts Ahead, But Not Because of Market Rout

The Federal Reserve Board building on Constitution Avenue is pictured in Washington, US, March 27, 2019. REUTERS/Brendan McDermid/File Phot
The Federal Reserve Board building on Constitution Avenue is pictured in Washington, US, March 27, 2019. REUTERS/Brendan McDermid/File Phot
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Fed Policymakers Signal Rate Cuts Ahead, But Not Because of Market Rout

The Federal Reserve Board building on Constitution Avenue is pictured in Washington, US, March 27, 2019. REUTERS/Brendan McDermid/File Phot
The Federal Reserve Board building on Constitution Avenue is pictured in Washington, US, March 27, 2019. REUTERS/Brendan McDermid/File Phot

Federal Reserve policymakers are increasingly confident that inflation is cooling enough to allow interest-rate cuts ahead, and they will take their cues on the size and timing of those rate cuts not from stock-market turmoil but from the economic data.
That was the shared message of three US central bankers speaking on Thursday who otherwise had slightly different takes on exactly where the economy stands a week and a day after they decided to hold the policy rate steady but signaled a reduction as soon as next month, Reuters said.
A jump in the July US unemployment rate reported on Friday helped spark a global stock market rout that continued into Monday before equities partially recovered, as investors and analysts worried the US was headed for a recession and the Fed would need to react aggressively.
"It's hard to make the case that something has just happened that is monumental on the equity side," Richmond Federal Reserve Bank President Thomas Barkin said on Thursday, noting major US stock-market indices are still up from the start of the year.
More to the point on policy, he said at a virtual event put on by the National Association for Business Economics, is "all the elements of inflation seem to be settling down (and) I'm relatively hopeful based on the conversations I'm having that that's going to continue."
Those same conversations with business leaders also suggest the cooling in the US labor market is coming from slower hiring rather than a rise in layoffs, he said.
"I think you've got some time in a healthy economy to figure out whether this is an economy that's gently moving into a normalizing state that will allow you to, in a steady deliberate way, normalize rates or ... is this one where you really do have to lean into it."
Kansas City Fed President Jeff Schmid, one of the US central bank's more hawkish policymakers, also took note of the recently roiled financial markets.
"Financial conditions can both reveal important information on the trajectory of the economy and can also spillover to impact the real economy," he said in remarks prepared for delivery to the Kansas Bankers Association's annual meeting in Colorado Springs, Colorado. "However, the Fed has to remain focused on achieving its dual mandate" of full employment and price stability.
On that score, he said, recent "encouraging" data showing inflation around 2.5% gives him more confidence inflation is headed to the Fed's 2% goal.
"If inflation continues to come in low, my confidence will grow that we are on track to meet the price stability part of our mandate, and it will be appropriate to adjust the stance of policy," he said.
Schmid described the economy as resilient, consumer demand as strong, and the labor market as noticeably cooling but still "quite healthy," and said he views the current policy stance as "not that restrictive."
"With the tremendous shocks that the economy has endured so far this decade, I would not want to assume any particular path or endpoint for the policy rate," he said.
Chicago Fed President Austan Goolsbee on Thursday reiterated his view the central bank's policy is tight, and that to leave borrowing costs where they are even as inflation falls is to make it even tighter, risking harm to the labor market.
But like his more hawkish counterparts, Goolsbee said the stock market, and the upcoming presidential election, would not determine Fed policy.
"The Fed's out of the election business. The Fed is in the economic business," Goolsbee said in an interview on Fox News. "We're not in the business of responding to the stock market. We're in the business of maximizing employment and stabilizing prices."



Gold Bounces Back on Softer Dollar, US-Iran Concerns; Silver Rebounds

Gold and silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. REUTERS/Angelika Warmuth
Gold and silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. REUTERS/Angelika Warmuth
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Gold Bounces Back on Softer Dollar, US-Iran Concerns; Silver Rebounds

Gold and silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. REUTERS/Angelika Warmuth
Gold and silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. REUTERS/Angelika Warmuth

Gold rebounded on Friday and was set for a weekly gain, helped by bargain hunting, a slightly weaker dollar and lingering concerns over US-Iran talks in Oman, while silver recovered from a 1-1/2-month low.

Spot gold rose 3.1% to $4,916.98 per ounce by 09:31 a.m. ET (1431 GMT), recouping losses posted during a volatile Asia session that followed a fall of 3.9% on Thursday. Bullion was headed for a weekly gain of about 1.3%.

US gold futures for April delivery gained 1% to $4,939.70 per ounce.

The US dollar index fell 0.3%, making greenback-priced bullion cheaper for the overseas buyers.

"The gold market is seeing perceived bargain hunting from bullish traders," said Jim Wyckoff, senior analyst at Kitco Metals.

Iran and the US started high-stakes negotiations via Omani mediation on Friday to try to overcome sharp differences over Tehran's nuclear program.

Wyckoff said gold's rebound lacks momentum and the metal is unlikely to break records without a major geopolitical trigger.

Gold, a traditional safe haven, does well in times of geopolitical and economic uncertainty.

Spot silver rose 5.3% to $74.98 an ounce after dipping below $65 earlier, but was still headed for its biggest weekly drop since 2011, down over 10.6%, following steep losses last week as well.

"What we're seeing in silver is huge speculation on the long side," said Wyckoff, adding that after years in a boom cycle, gold and silver now appear to be entering a typical commodity bust phase.

CME Group raised margin requirements for gold and silver futures for a third time in two weeks on Thursday to curb risks from heightened market volatility.

Spot platinum added 3.2% to $2,052 per ounce, while palladium gained 4.9% to $1,695.18. Both were down for the week.


Europe, Türkiye Agree to Work Toward Updating Customs Union

European Union (R) and Turkish flags fly at the business and financial district of Levent in Istanbul, Türkiye September 4, 2017. REUTERS/Osman Orsal
European Union (R) and Turkish flags fly at the business and financial district of Levent in Istanbul, Türkiye September 4, 2017. REUTERS/Osman Orsal
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Europe, Türkiye Agree to Work Toward Updating Customs Union

European Union (R) and Turkish flags fly at the business and financial district of Levent in Istanbul, Türkiye September 4, 2017. REUTERS/Osman Orsal
European Union (R) and Turkish flags fly at the business and financial district of Levent in Istanbul, Türkiye September 4, 2017. REUTERS/Osman Orsal

The European enlargement chief and the Turkish foreign minister said on Friday they had agreed to continue work toward modernizing the EU-Türkiye customs union and to improve its implementation, Reuters reported.

European Commissioner for Enlargement Marta Kos met Turkish Foreign Minister Hakan Fidan in the capital Ankara on Friday.

"They shared a willingness to work for paving the way for the modernization of the Customs Union and to achieve its full potential in order to support competitiveness, and economic security and resilience for both sides," they said in a joint statement afterward.

The sides also welcomed the gradual resumption of European Investment Bank (EIB) operations in Türkiye and said they intended to support projects across the country and neighbouring regions in cooperation with the bank.


Bitcoin Falls 8% and Asian Shares Mostly Slip after Wall Street is Hit by Tech Stock Losses

FILE PHOTO: Representation of Bitcoin cryptocurrency in this illustration taken September 10, 2025. REUTERS/Dado Ruvic/Illustration/File Photo
FILE PHOTO: Representation of Bitcoin cryptocurrency in this illustration taken September 10, 2025. REUTERS/Dado Ruvic/Illustration/File Photo
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Bitcoin Falls 8% and Asian Shares Mostly Slip after Wall Street is Hit by Tech Stock Losses

FILE PHOTO: Representation of Bitcoin cryptocurrency in this illustration taken September 10, 2025. REUTERS/Dado Ruvic/Illustration/File Photo
FILE PHOTO: Representation of Bitcoin cryptocurrency in this illustration taken September 10, 2025. REUTERS/Dado Ruvic/Illustration/File Photo

US futures and Asian shares traded mostly lower on Friday, tracking Wall Street’s losses as technology stocks again dragged on markets.

Bitcoin sank to roughly half its record price, giving back all it gained since US President Donald Trump won the White House for his second term.

Tokyo’s Nikkei 225 was up 0.8% to 54,253.68, recovering from losses earlier this week, with technology-related stocks leading gains. SoftBank Group rose 2.2% and chipmaker Tokyo Electron rose 2.6%. Japan will also be holding its general election on Sunday, in which Prime Minister Sanae Takaichi expects to win a stronger public mandate for her policies.

Shares of Toyota Motor were up 2%. The carmaker said Friday its CEO Koji Sato will be stepping down in April, and is to be replaced by Chief Financial Officer Kenta Kon, The Associated Press said.

South Korea’s Kospi lost 1.4% to 5,089.14, weighed down by tech shares. Samsung Electronics, the country’s biggest listed company, fell 0.4%. Chipmaker SK Hynix was also down 0.4%.

Hong Kong’s Hang Seng fell 1.4% to 26,519.60. The Shanghai Composite index was down 0.3% to 4,065.58.

In Australia, the S&P/ASX 200 shed 2% to 8,708.80.

Taiwan’s Taiex was mostly flat. India's Sensex traded 0.1% lower.

Against the backdrop of the technology sell-off this week, bitcoin, the world’s largest cryptocurrency, saw dimming enthusiasm and was trading about 8% lower at just under $65,000 early Friday, after it briefly sank over 12% to below $64,000 on Thursday. That’s down from a record of above $124,000 in October.

The future for the S&P 500 was 0.2% lower, while that for the Dow Jones Industrial Average fell 0.1%.

On Thursday, the S&P 500 fell 1.2% to 6,798.40, its sixth loss in the seven days. The Dow Jones Industrial Average fell 1.2% to 48,908.72. The Nasdaq composite dropped 1.6% to 22,540.59.

Technology stocks were among the worst hit as concerns persist over whether massive AI investments by many of the Big Tech firms will pay off.

Chipmaker Qualcomm sank 8.5% despite better-than-expected quarterly revenues. Alphabet lost 0.5% as investors were focused on its huge spendings on AI.

Amazon fell 11% in after hours trading Thursday after it announced plans to boost capital spending by more than 50% to $200 billion in AI and other areas.

American artificial intelligence startup Anthropic ’s new AI tools also fueled the sell-off of software stocks on Wall Street this week, as its sophistication means many traditional software development services and products could be disrupted or replaced.

Gold and silver prices have been volatile this week following a monthslong rally as investors moved into safe haven assets prompted by factors including elevated geopolitical tensions. Gold prices fell 0.6% on Friday to $4,858.60 per ounce, after nearing $5,600 last week.

Silver prices dropped 5.5% to $72.52 per ounce after rising earlier this week. It lost more than 31% last Friday.

In other dealings early Friday, US benchmark crude oil gained 35 cents to $63.64 a barrel. Brent crude, the international standard, rose 36 cents to $67.91 a barrel.

The US dollar fell to 156.74 Japanese yen from 157.03 yen. The euro was trading at $1.1789, up from $1.1777.