On February 7, traders focused on Fed Chair Powell’s comments on the monetary policy at The Economic Club of Washington.
Powell noted that the disinflationary process had begun, but there was a long way to go before Fed’s inflation target would be reached. Importantly, Powell stated that Fed would not change its 2% inflation target, which remained the global standard.
According to Powell, the road to the 2% inflation will be bumpy. The recent job market data was much stronger than expected, and the Fed must continue to raise rates to reach a sufficiently restrictive level. Powell also noted that he expected significant progress in the fight against inflation.
Speaking about the potential for a rate cut in 2023, Powell said that Fed’s decisions would depend on economic data. The Fed continues to reduce the size of the balance sheet and has no target for this reduction. As in the case of interest rates, the decision to stop the reduction of the size of Fed’s balance sheet would be data-dependent.
previous analysis :
Powell noted that the disinflationary process had begun, but there was a long way to go before Fed’s inflation target would be reached. Importantly, Powell stated that Fed would not change its 2% inflation target, which remained the global standard.
According to Powell, the road to the 2% inflation will be bumpy. The recent job market data was much stronger than expected, and the Fed must continue to raise rates to reach a sufficiently restrictive level. Powell also noted that he expected significant progress in the fight against inflation.
Speaking about the potential for a rate cut in 2023, Powell said that Fed’s decisions would depend on economic data. The Fed continues to reduce the size of the balance sheet and has no target for this reduction. As in the case of interest rates, the decision to stop the reduction of the size of Fed’s balance sheet would be data-dependent.
previous analysis :
