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😱🔥What message will the Fed give tonight? All eyes on Powell
The markets are focused on the statements that #Fed chairman Powell will make tonight. While the Fed is expected to keep the interest rate steady, Powell's messages are a matter of curiosity.
According to a note by Bank of America economists, the Fed's main message is likely to be:
It will be emphasized that more time is needed to fully see the effects of the policy
It will be signalled that the next move is likely to be a rate cut
It will be noted that the Committee has taken a ‘wait and see’ position until the Fed gets more clarity on inflation
BofA economists also expect the monetary tightening to be slowed by reducing the treasury bond redemption limit from $ 60 billion to $ 30 billion.
Finally, the note said, “We are skeptical that Powell is satisfied that this year's rate cuts are priced in significantly. Probably, Powell will have a hard time ‘hawkish’ the market.” it was said.
It is thought that the tone at Powell's press conference will be parallel to the statements on April 16. Powell had said that day that interest rates could stay high for longer and that the central bank would keep policy as restrictive as necessary.
The trend in the markets is that the Fed will make 1 interest rate cut this year. It is thought that if Powell gives signs that the rate cuts are likely to be postponed until 2025, the expected 1 rate cut will also start to be questioned.
Finally, Valentin Marinov, head of research and strategy at Credit Agricole FX, said, “Now all eyes are on the Fed, and investors are wondering how Powell will react. Will it give more weight to disappointing growth data or will it highlight sticky inflation... I am of the opinion that the bar is high for hawkish surprises." said.
