US Markets
Wednesday, October 18th, 2023 8:03 pm EDT
Key Points
- Federal Reserve Chair Jerome Powell is delivering a key policy address in which he must convince markets that the central bank is committed to tackling inflation but may now require a less forceful approach. Powell’s speech comes at a critical time for the U.S. economy.
- While inflation numbers have shown improvement, Treasury yields have been surging, creating conflicting signals about the direction of monetary policy. Markets largely anticipate the Fed keeping rates unchanged, and they are looking to Powell for clarification on how officials view current conditions and longer-term trends.
- Powell is expected to emphasize that the Fed needed to raise rates quickly, that the debate now centers on finding a peak rate level, and that the central bank must determine how long rates need to remain high to bring inflation back to its 2% target. “Higher for longer” has become a guiding principle among Fed officials. Powell is also likely to reiterate the Fed’s data-dependent focus after raising its benchmark rate 11 times for a total of 5.25 percentage points, the highest level in 22 years.
Federal Reserve Chair Jerome Powell is set to give a crucial policy address to the Economic Club of New York. This comes at a pivotal moment for the U.S. economy, with conflicting signals from improving inflation numbers and surging Treasury yields. Markets expect the Fed to keep rates steady, but they’re seeking clarity from Powell on the central bank’s views on current conditions and long-term trends. The main themes in Powell’s message are expected to focus on how quickly the Fed raised rates, what the peak level should be, and how long rates need to remain high to bring inflation down. “Higher for longer” is becoming a guiding principle among Fed officials. Powell is likely to maintain a hawkish tone while emphasizing a data-dependent approach and avoiding complacency in the fight against inflation.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/10/18/fed-chair-powell-to-deliver-key-speech-thursday-heres-what-to-expect.html
