Federal Reserve Chairman Powell addresses market concerns amidst expectations of a 100 basis points interest rate cut. Powell expresses uncertainty about the restrictive stance and warns of the risk of stronger growth impacting inflation progress. Short-term interest rate futures decline post his remarks, impacting FedWatch estimates.
Federal Reserve Chairman Jerome Powell has addressed concerns amid market expectations, stating, “We are not sure if we have taken a restrictive stance enough.” Powell acknowledges the expectation of a 100 basis points interest rate cut next year and the market’s satisfaction with weakening employment data.
Tight Labor Market and Caution on Inflation Powell notes the labor market’s tightness but anticipates a move toward a better balance. While pleased with inflation progress, he remains cautious, stating, “There is still a long way to go.” He emphasizes the potential risk of stronger growth undermining inflation progress, indicating a readiness for a monetary policy response if necessary.
Market Impact: Decline in Short-term Interest Rate Futures
Following Powell’s remarks at the IMF, short-term US interest rate futures experienced a decline. FedWatch estimates for the first interest rate cut were postponed from May to June, reflecting the market’s response to Powell’s comments. The statements imply that verbal guidance threats and potential further increases may not entirely favor cryptocurrency investors.
