PT Solid Gold Berjangka | Powell Says Fed Has Time to Assess Data Before Deciding to Cut
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Solid Gold Berjangka | Here’s a summary of the key points from Federal Reserve Chair Jerome Powell’s recent remarks on interest rates and inflation:
- Powell’s View on Inflation: Powell noted that recent inflation figures, while higher than expected, have not fundamentally changed the overall picture. He stated that it is too early to determine if these readings are more than a temporary bump.
- Policy Rate Cut: The Federal Reserve is not in a hurry to cut interest rates. Powell emphasized that they will wait for greater confidence that inflation is moving sustainably toward their 2% target before considering a rate cut.
- Timing of Rate Cut: Powell reiterated that it will likely be appropriate to begin lowering rates “at some point this year,” but the exact timing will depend on incoming data. The Fed’s stance suggests they are not likely to reduce rates at the upcoming April 30-May 1 meeting.
- Market Expectations: Investors are divided on the timing of a rate cut. There are roughly even odds on an initial cut in June, with some pricing suggesting fewer than three reductions this year.
- Fed’s Approach: Powell emphasized that they have time to let incoming data guide their decisions on policy. The Fed is closely monitoring economic indicators and inflation readings to determine the appropriate path for interest rates.
- Inflation Trends: The Fed’s preferred gauge of underlying inflation cooled in February after a notable increase in January. The core personal consumption expenditures price index, excluding volatile food and energy costs, showed the biggest back-to-back increases in a year.
- Market Reaction: Following Powell’s remarks, Treasury yields reversed or pared earlier gains, while the S&P 500 remained higher. Investors are paying close attention to Fed signals for insights into future monetary policy decisions.
- Analyst Views: Analysts like Kathy Bostjancic from Nationwide Mutual Insurance Co. suggest that while Powell sounds dovish, indicating a willingness to cut rates, the Fed is likely waiting for further softening in inflation readings. Bostjancic sees a rate reduction in July as more likely, based on current information.
Overall, Powell’s remarks suggest a cautious approach by the Fed, with a willingness to adjust rates if needed but a preference to wait for clearer signals on inflation before making any moves.