VOO Slips as Fed’s Powell Takes Hawkish Tone for Rate Policy

The shares fell on Wednesday after the Federal Reserve Chairman Jerome Powell hit a more honest tone than expected in his press conference after preparation, which led to a reduction in his hopes of reducing the interest rate in September.

The US Central Bank left its federal funds unchanged within 4.25 % to 4.5 % – as it was for all market expectations 2025. But Powell’s comments on the next federal reserve steps were less than expected.

the Vanguard S & P 500 ETF (VOO)Which rose 0.3 % before the announcement, reversing the speed of the path and the last time was circulated with a similar amount.

The future contracts associated with the interest rate expectations at the Federal Reserve Bank reflected the shift in feelings. The implicit possibility of cutting September decreased from approximately 70 % to less than 50 % after the Powell press conference, according to CME Fedwatch data.

Although the average decision itself was relatively calm, it included a remarkable development: a member of the Board of Governors at the Federal Reserve, in favor of a price reduction. This is the first such opposition since 1993, according to Bloomberg.

However, the market ignores that and focus instead on Powell’s frequency indicating the shift of policy in the short term.

“We will need to see data,” Powell said when asked whether the Fed Bank will reduce prices in September. “It can go in many different directions,” he added.

Powell also avoided addressing recent criticism from president Donald Trump, who has publicly called for low interest rates.

“I think the presence of an independent central bank was an institutional arrangement that had served the public well,” said Powell.

Regarding the subject of commercial policy, Powell acknowledged that the customs tariff can push prices up, even if the current impact is limited.

“What we have seen now is the beginnings of everything that turned out to be the effects that revolve around the enlargement of goods,” he said. He added that there is a “long way to go” to know what is the final impact of definitions on prices. “It seems that there is a lot in the future,” he said.

However, Powell said it is reasonable expected that any increase in prices from the “short -term” tariffs will be “reflects a single -time shift in the price level.”

He described the monetary policy as “moderately restricted”, noting that such a situation is still appropriate given that “inflation is slightly higher than the goal” and that the labor market is “balanced.”

In a comment, it may have been aimed at critical of the cautious federal reserve approach, Powell said: “You can say that we are looking a little by enlarged goods by not raising prices. We did not interact with the new inflation. But I mean, I will not insist on that.”

Despite the position of the Federal Reserve, the broader gathering of stocks remains in 2025 to a large extent. The shares increased this year with the decline in tensions from the trade war of President Trump amid new deals, and the profits of the flourishing companies, which are fueled by the artificial intelligence revolution, continued to raise morale in the market.

Although the markets in September will be welcomed by the markets, the current assembly seems to be able to maintain itself, even if the federal reserve remains suspended.

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