INSUBCONTINENT EXCLUSIVE:
Federal Reserve Chairman Jerome Powell on Friday moved to mollify financial markets concerned about a US economic slowdown, saying that
while momentum is solid, US central bank will be sensitive to downside risks market is pricing in.
Powell also said he would not quit if
asked to resign by President Donald Trump, who has repeatedly chastised Fed for its interest rate hikes.
Market reaction:Stocks: Major
payrolls report, with greenback weaker against both euro and yen
Rate futures: Fed funds contract for January 2020 drop further, retracing
uncertainty that he had created for risk assets
engaging in tightening policy because economy is doing well
rate hikes, leads markets to believe that indication of two rate hikes in 2019 may not come to fruition and we may see at most one or no
rate hikes and that means markets are feeling better that Fed is not strangling overall economy and perhaps forcing it into a recession and
slowdown economy to point where no one is looking for a loan, no one is going to be looking to borrow money during a recession so it impacts
The Fed needs to rebuild market confidence in its communications and today is first great step
his speech was about what central bank is expected to do and not expected to do
He mentioned that there is no pre-set path
was not as forceful as some people, myself included, expected him to be
trying to calibrate economy and what kind of slowdown is going to occur, and concern about an economic slowdown as well as a potential
on USD and giving risk sentiment a boost
He cited 2015/2016 period when developments outside of US delayed rate normalization plans
market concerns and we are glad to see that
It goes along with our dollar narrative that indeed dollar can afford to shed some value
of commenters in media were focused on fact that they had raised rates though there had been weaker inflation and weaker stocks going into
I think that lead to inappropriate expectations that Fed would blindly continue to raise rates in face of weakening economic conditions
defining moment for equity market bounce
There is great relief that Powell has pulled back on his hawkish rhetoric and is a bit more conciliatory
position of fading rallies
that a couple of changes in statement was enough to indicate uncertainty on future path of funds rate and really it was not taken that
And so I thought it was interesting that he came out with, not a prepared statement, but what appeared to be several cheat sheets to ensure
The things he said today, are leading traders, investors to believe that Fed is willing to potentially change their projections for rate
did change was probability of a rate cut happening this year which was also something markets had been pricing in, which dropped to 30 per
just reiterating law he lay down in December
