Federal Reserve Chair Jerome Powell is set to inform Congress on Wednesday that the central bank does not anticipate it would be suitable to decrease the policy rate until there is increased confidence in inflation persistently moving toward the 2% target, as stated in the prepared statement released by the Fed.
Key takeaways from Powell’s prepared statement
“At some point in the current year, it is likely deemed appropriate to initiate the moderation of policy restraint.”
“The policy rate is anticipated to have reached its zenith for this economic cycle.”
“The economic outlook is characterized by uncertainty, and the continual advancement toward achieving a 2% inflation target is not guaranteed.”
“We will diligently evaluate incoming data, the evolving economic outlook, and the delicate balance of associated risks.”
“Potential pitfalls exist in both the premature and rapid reduction of rates, as well as the risks associated with delaying or implementing insufficient adjustments.”
“The labor market retains its relatively tight conditions.”
“The Federal Reserve’s restrictive stance is exerting a downward influence on both economic activity and inflationary pressures.”
“The demand for labor continues to outstrip available supply, with nominal wage growth exhibiting signs of moderation.”
“The risks associated with achieving dual policy goals are approaching a more favorable equilibrium.”
“While inflation remains slightly above the 2% target, there has been a noticeable easing in its trajectory.”
“The economy has achieved substantial progress over the past year in pursuit of the dual mandate.”
This section below was published as a preview of Federal Reserve Chairman Jerome Powell’s testimony at 12:00 GMT.
- Jerome Powell’s testimony in the US Congress is poised to be a top-tier market-moving event.
- New insights into the Federal Reserve’s interest rate trajectory are eagerly anticipated.
- The US Dollar, stock markets, and other asset classes could experience significant swings based on the words of the Fed Chair.
On March 6, Jerome Powell, the Chairman of the Federal Reserve System, is scheduled to testify before the Senate Committee on Banking, Housing, and Urban Affairs in the US Congress. The hearing, titled “The Semi-Annual Monetary Policy Report to the Congress,” is set to commence at 15:00 GMT (10:00 US Eastern Standard Time), drawing the keen focus of all financial market participants.
During his upcoming testimony, Jerome Powell is anticipated to discuss key points outlined in the semi-annual Federal Reserve Monetary Policy Report, released last Friday. The report stated that the Fed deems it inappropriate to reduce the target range until there is more confidence in inflation sustainably reaching 2%, and emphasized attentiveness to inflation risks. It also reiterated that the risks to achieving goals have improved in balance.
US representatives are likely to question Powell on topics such as the outlook on interest rates, developments in inflation, and engage in a lengthy Q&A session regarding the future trajectory of interest rates and the Fed’s assessment of the necessity for additional monetary policy tightening. Powell’s testimony has the potential to trigger significant movements in the US Dollar, US Treasury bond yields, stock markets, and across all asset classes, including the Gold price and major currency pairs.
