(Reuters) – U.S. Federal Reserve Chairman Jerome Powell said on Wednesday that continued progress on inflation “is not assured”, although the central bank still expects to cut its rate. benchmark interest later this year.
“If the economy performs broadly as expected, it will likely be appropriate to begin reversing policy restraint at some point this year,” Powell said in a speech prepared for the House Financial Services Committee, then as U.S. lawmakers prepare to face inflation-weary voters. in a busy presidential election year.
“But the economic outlook is uncertain and continued progress toward our 2% inflation goal is not assured,” Powell said.
COMMENTS:
CHRIS ZACCARELLI, CHIEF INVESTMENT OFFICER, ALLIANCE INDEPENDENT ADVISOR, CHARLOTTE, NORTH CAROLINA “The President has been consistent at least in some of the last two meetings and the fact that Powell has reiterated that he will cut rates later this year , I think it’s a good thing. for the markets. “Markets went from expecting lots of rate cuts to worrying about whether or not the Fed was going to cut rates this year, and the fact that they were saying they still wanted to cut them, I think overall is good news for the markets.
MARKET REACTION:
– S&P 500 e-mini futures added to gains and rose 0.59%
– The yield on U.S. benchmark 10-year bonds fell 1.4 basis points to 4.123%. The yield on the 2-year bond rose but is still down 1.9 basis points at 4.5328% from Tuesday evening.
– The dollar index extended its loss to -0.29% at 103.48; with the euro added to a 0.28% gain at $1.0885.
PHIL BLANCATO, MANAGING DIRECTOR OF LADENBURG THALMANN ASSET MANAGEMENT, NEW YORK “The comments are consistent with what we expect from the Chairman at this stage. He was very measured in what he said about the overall health of the American economy. And “From an inflationary point of view, we are not there yet. His comments will once again support the talk that the Fed is not yet ready to cut and that means the first cut is more likely in the fall rather than earlier.”
RICK MECKLER, PARTNER, CHERRY LANE INVESTMENTS, NEW JERSEY
“I don’t think stock investors expected anything different from him (Powell). It’s still significant that they (the Fed) are expecting a rate cut later this year and that’s really what investors have been focused on: the end seems to be in sight of the really restrictive initial rates.”
“(Investors) continue to look for stocks that have high growth rates and can perform well in today’s economy.”
KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO
Powell clearly cautioned markets against waiting for an imminent shift toward rate cuts, following in the footsteps of many of his colleagues in saying the Fed will need “greater confidence that “that inflation is moving sustainably towards 2%” before starting to slow. He acknowledged that it will likely be appropriate to start returning to policy austerity at some point this year, but also noted that price risks – as illustrated by the warmer-than-expected January data – could mean that “continued progress towards our 2% inflation target is not assured.”
“The chances of an increase in the summary of economic projections at the Fed meeting at the end of March are strengthening somewhat, but Powell has generally failed to “outperform” the markets and the dollar remains stable relative to its main rivals.”
(Compiled by the Global Finance & Markets Breaking News team)
