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Global markets to closely monitor Jerome Powell's speech on Friday
(MENAFN) Global markets are poised to closely monitor US Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole Economic Symposium in Wyoming this Friday. Powell's remarks are anticipated to provide critical insights into the Fed's future monetary policy trajectory. The symposium, hosted annually by the Kansas City Fed, is a key event that often influences global economic perspectives and policy expectations.
Since March 2022, the Federal Reserve has been on a tightening cycle due to high inflation, implementing a series of rate hikes totaling 525 basis points across 11 increases. This aggressive policy elevated the Fed's target rate to between 5.25 percent and 5.50 percent, marking its highest level since 2001. Despite these hikes, the Fed decided to keep its policy rate unchanged for the eighth consecutive month in July, amid ongoing inflationary pressures and a volatile economic environment.
Powell has suggested that a rate cut could be possible in September if inflation expectations improve and the labor market remains robust. However, recent economic data have been mixed: employment figures for July fell short of forecasts, and the unemployment rate rose to its highest level in nearly three years, which has heightened recession concerns in the market. These factors have influenced market expectations, with a growing belief that a 25-basis-point rate cut is more likely than a 50-basis-point reduction, especially following recent inflation data that indicated easing price pressures and strong retail sales.
The outcome of Powell's speech will be critical in shaping market sentiment and expectations regarding the Fed's next moves. Investors and analysts will be watching closely for any indications of how the central bank plans to navigate the ongoing economic challenges and adjust its monetary policy accordingly.
Since March 2022, the Federal Reserve has been on a tightening cycle due to high inflation, implementing a series of rate hikes totaling 525 basis points across 11 increases. This aggressive policy elevated the Fed's target rate to between 5.25 percent and 5.50 percent, marking its highest level since 2001. Despite these hikes, the Fed decided to keep its policy rate unchanged for the eighth consecutive month in July, amid ongoing inflationary pressures and a volatile economic environment.
Powell has suggested that a rate cut could be possible in September if inflation expectations improve and the labor market remains robust. However, recent economic data have been mixed: employment figures for July fell short of forecasts, and the unemployment rate rose to its highest level in nearly three years, which has heightened recession concerns in the market. These factors have influenced market expectations, with a growing belief that a 25-basis-point rate cut is more likely than a 50-basis-point reduction, especially following recent inflation data that indicated easing price pressures and strong retail sales.
The outcome of Powell's speech will be critical in shaping market sentiment and expectations regarding the Fed's next moves. Investors and analysts will be watching closely for any indications of how the central bank plans to navigate the ongoing economic challenges and adjust its monetary policy accordingly.
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