Powell speech: Prepared to increase pace of rate hikes

Eren Sengezer FXStreet

Below are the key takeaways from FOMC Chairman Jerome Powell's prepared statement for delivery at the Semi-annual Monetary Policy Report testimony before the US Senate Banking Committee.

Key quotes

"If totality of incoming data indicates faster tightening is warranted, we are prepared to increase pace of rate hikes."

"Ultimate level of interest rates likely to be higher than previously anticipated."

"Will continue to make our decisions meeting by meeting, based on totality of incoming data and implications for outlook for growth and inflation."

"Some of strength in overall January data likely reflects unseasonably warm weather."

"Little sign of disinflation so far in core services excluding housing."

"To get inflation back down to 2% need lower inflation in core services ex housing and very likely some softening in labor market."

"Ongoing increases in policy rate likely appropriate in order for stance to be sufficiently restrictive to get inflation back to 2% over time."

"Long way to go on getting inflation back down, road likely to be bumpy."

"We still stay the course until job is done."

Market reaction

The US Dollar Index shot higher with the initial reaction and was last seen rising 0.6% on the day at 104.92.

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.

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.