Powell speech: Market's tepid inflation expectations one argument for lower rates

Eren Sengezer FXStreet

Additional comments from Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, cross the wires as he continues to speak at the Council on Foreign Relations in New York.

Powell said that he takes the market's apparently somewhat tepid inflation expectations seriously and added that he saw that as an argument for lower rates. Meanwhile, after staging a recovery to 96.36 with the initial reaction to St. Louis Fed President Bullard's hawkish remarks, the US Dollar Index lost its momentum and was last up 0.12% on a daily basis at 96.12. Below are some key takeaways, as reported by Reuters.

"Tariffs are not large enough to be major threat to economy alone, but could hurt confidence or markets more broadly."

"It is too early to prejudge outcome of broader Fed policy review."

"Policymakers are trying to find a credible U.S. inflation framework that the public would act on."

"Mentions of concerns on trade and tariffs in latest Beige Book doubled."

"Inflation expectations are pinned around Fed's 2% target."

"There are many factors weighing on global inflation, wage growth and productivity."

"Fed still has ability to be lender of last resort to solvent institutions in case of a crisis."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.