Fed Chief Jerome Powell will give a speech tonight on what the US central bank will do with interest rates. The presumption is that interest rates will be raised again, and US macroeconomist Philip Marey of RaboResearch can understand this.
He cites the strong US job market report released last Friday. “Unemployment has fallen and employment has strengthened,” Marey said. This gives the central bank a reason to continue with rate hikes for now. And I think that’s what the market is waiting for: how aggressive is Jerome Powell sounding this afternoon?’
Still, Marey doesn’t expect much panic if Powell does indeed announce a small interest rate hike. “If he indicates that he doesn’t want to react too quickly to a separate report and that more data is expected, then that calms things down,” she says. Expectations of further interest rate hikes will also decrease.
Good time
But there’s a flip side to that coin, Marey thinks. “He can also see it as a good time to fend off the market,” she says. “The market has long had doubts about the Fed’s course. They’ve even priced interest rate cuts for the second half of the year, and Powell could use the labor market report to indicate that this year is really not in the cards. ‘
The Fed itself has indicated it will hike interest rates two more times this year. “Twice 25 basis points,” Marey points out. And this decision confirms it. The main question is whether the Fed will pick up the pace this year.
Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
