Calling monetary policymaking a “forward-looking exercise,” Powell also said, “We’re going to be letting incoming data inform our thinking about the appropriate path.”
“But what happened to data dependency?” O’Leary challenged. “Why guarantee two” rate hikes next year?
That’s one fewer than the Fed had projected for 2019 after its September rate increase.
Veteran trader Art Cashin later echoed O’Leary’s sentiments. The UBS director of floor operations at the New York Stock Exchange said the markets hoped Powell would say they were “on target now” and would watch the data before they agency considers more moves.
“Instead, they said we’re reducing it from three to two” hikes, Cashin said on “Squawk on the Street.” “That certainly didn’t make anybody feel any better. That’s why you got that little bit of an overreaction.”
The major indexes all fell to their lowest levels year-to-date following the Fed and Powell’s Wednesday announcement. Wall Street opened lower on Thursday.
Powell “reinterpreted the official policy; that’s what I heard,” O’Leary said. “He basically added his own spin to it with that extra two. That really bothered me.”