Fed Chair Jerome Powell remarked in a speech on Monday that he doesn't see an elevated likelihood of a recession in the next year, reported Reuters. "It's hard to say what the economy will look like in wake of recent events, but no one is sitting around waiting for the old regime to come back."
Powell reiterated on Monday his expectations that at the upcoming Fed meeting, the central bank will begin the process of balance sheet reduction, a process to last three years. Monetary quantities are not an important part of the inflation story at this time.
Fed Board of Governors member Christopher Waller said on Friday in an interview on CNBC that while the data is calling out for the Fed to move in 50bps increments, geopolitical events call for caution. The data is suggesting that we move in the direction of a 50bps hike at the coming meetings.
Hawkish now, more hawkish later? The Federal Reserve's dot-plot has shown only a total of seven rate hikes in 2022, below seven that bond markets see – a 25 bps move in every single meeting this year. One down, six more to go. That is moderately bullish for the dollar, and the limited reaction makes sense.
Consumer sentiment last month was the worst in almost a decade but depression did not keep anyone home. Consumer spending saw the largest gain in ten months. In fact, if you leave out the four months of pandemic distortion, it was the biggest single month jump in consumption in three decades. A red-hot job market and the receding pandemic seem to have blunted the damaging impact of the highest inflation in a generation.
The Federal Reserve kept its rate policy on schedule, indicating in its statement and Chair Jerome Powell’s press conference that it will raise the fed funds rate at the March meeting for the first time in three years. In doing so the governors refused to be distracted by January’s turbulent equity correction or preliminary signs that the US economy may be slowing, preferring their new focus on inflation.
More dovish than hawkish market expectations – as described in the preview – and that is enough to boost stocks, extending their gains. First, despite a new and more hawkish composition, the Fed voted unanimously. There were no hawkish dissenters, showing that Powell remains in control. Second, the signal to raise rates does not include a date – "fairly soon" probably means March, but it is not a strong commitment. Third, the Fed continues printing money – no early end to its tapering scheme. That means a bit more money to support stocks.
This is what it sounds like when the doves cry – monetary policy was unlikely on Prince's mind, but his famous 1980s song reflects the Federal Reserve's decision as it confronts 1980s-style inflation. The Fed expects three rate hikes in 2022. That is more than expected and a sharp hawkish shift from September.
GBP/USD retreats slightly after rising toward 1.3300 earlier in the day but manages to hold above 1.3250 in the early European session. The data published by the UK's Office for National Statistics revealed that inflation, as measured by the Consumer Price Index (CPI), jumped to 6.2% on a yearly basis in February from 5.5% in January.
EUR/USD is looking to recapture 1.1050, as the US dollar meets fresh supply on the market's optimism, ignoring the firmer Treasury yields. The Ukraine conflict rages on, as the focus shifts towards Fed Chair Powell's speech.
It might be darkest before dawn – the Russia-Ukraine war seems stuck in the mud after a month of fighting, but this stalemate could be a prelude to a deal.
Gold prices remain pressured despite recent inaction as Treasury yields renew multi-month top. Stock futures print mild gains but USD bulls stay cautious ahead of Powell’s speech. Ukraine-Russia crisis continues to take a toll on sentiment, Western sanctions eyed.
Algorand price shows resilience after witnessing a massive rally over the past week. This move could be key in triggering another run-up that can help ALGO recover its losses. Algorand price has bounced off a stable support level at $0.675.
With a pre-set regularity, a nation's Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one, being the interest rate that it will charge on loans and advances to commercial banks.
In the US, the Board of Governors of the Federal Reserve (FED) meets at intervals of five to eight weeks, in which they announce their latest decisions. A rate hike tends to boost the local currency, as it is understood as a sign of a healthy inflation. A rate cut, on the other hand, is seen as a sign of economic and inflationary woes and, therefore, tends to weaken the local currency.
If rates remain unchanged, attention and also main news and analysis turn to the tone of the FOMC (Federal Open Market Committee) statement, and whether the tone is hawkish, or dovish over future developments of inflation.
The Federal Reserve System (Fed) is the central banking system of the United States and it has two main targets or reasons to be: one is to keep unemployment rate to their lowest possible levels and the other one, to keep inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Fed official website, on Twitter and Facebook
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31,
2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury
under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
The World Interest Rates Table reflects the current interest rates of the main countries around the world, set by their respective Central Banks. Rates typically reflect the health of individual economies, as in a perfect scenario, Central Banks tend to rise rates when the economy is growing and therefore instigate inflation.
