FOMC Speakers Push Back on 50 BPS FED Rate Cut

The USD was declining after the 50 BPS FED rate cut, but Powell pushed back on another such cut on Monday, helping reverse the USD. Employment was softening in the US but it has stabilized, together with other economic indicators, which have relaxed the nerves at the FOMC, and now the rate cut process will be slower than what the market was expecting.

Federal Reserve Chair Jerome Powell announced on Monday that additional interest rate cuts are forthcoming, though they will be implemented gradually. His comments caught many investors off guard, as they had anticipated a more significant half-point rate reduction before the year ends.

However, the situation is still in the hands of the economic data as Powell stated, so it’s not a straightforward path. Therefore the interest from investors is high regarding the FOMC speech, and last night we had a number of FED speakers, such as FOMC Member Barkin, Bostic and Collins.

Comments from Fed Policy Member Barkin

• The recent 50 basis point rate cut was justified due to a decline in inflation and an unemployment rate nearing sustainable levels.
• Despite progress, the Fed cannot declare victory in the battle against inflation.
• Core PCE is expected to see little additional decline until next year.
• The median Fed policy projection shows a 50 basis point cut for the remainder of 2024, which could ease the pressure from high rates.
• While the labor market remains stable with low hiring and firing, there’s potential for increased demand for workers if overall demand picks up.
• The pace and extent of the rate reduction cycle will depend on how the economy and inflation trends evolve, requiring careful monitoring by the Fed.

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