Park Sang-hyun, a researcher at Hi Investment & Securities, said on the 30th, “Following the transformation of Federal Reserve Chairman Jerome Powell into a dove, even Federal Reserve Board Director Christopher Wheeler, known as the ‘Fed hawk,’ stated that further interest rate increases were unnecessary.” “Not only is the decline, but the dollar’s weakening trend is becoming clear,” he said.
| ▲ There are predictions that the dollar’s weakness may strengthen as hawkish members of the U.S. Federal Reserve continue to make dovish remarks. Pictured is Jerome Powell, Chairman of the U.S. Federal Reserve. <연방준비제도> |
Recently, the 10-year U.S. Treasury bond interest rate fell to the 4.2% range, and the dollar index fell to the 102 level for the first time since August 11.
This was interpreted as the dovish remarks of the U.S. Federal Reserve officials strengthening expectations for a weakening dollar as they strengthened the end of the U.S. interest rate hike cycle.
Unlike the September FOMC (Federal Open Market Committee) meeting where he stated that additional tightening was necessary, Chairman Powell was evaluated as dove when he suggested at the November meeting that whether or not additional tightening would be subject to change depending on price indicators.
At an event hosted by the American Enterprise Institute in Washington, D.C. on the 28th (local time), Federal Reserve Director Christopher Wheeler said, “There is growing confidence that the current monetary policy stance is appropriate to slow the U.S. economy and return inflation to 2%.” It also hinted at the possibility of a soft landing for the economy.
As hawkish members of the Federal Reserve continued to make dovish remarks, price and employment indicators were also expected to support the weakening dollar by lowering the need for interest rate increases.
Researcher Park said, “Price pressure will be tested again through the October PCE price and employment indicators, which will be announced in late November or early December,” but added, “It is unlikely that indicators sufficient to overturn the end of the Fed’s interest rate hike will be announced.” “It looks low,” he said.
Highly volatile employment indicators may emerge as a variable, but it is expected that the November consumer price index, which will be announced just before the December FOMC meeting, will likely record a decline compared to the previous month, considering the decline in energy prices. This is interpreted as adding strength to the end of the Fed’s interest rate hike cycle.
However, given that the U.S. economy is relatively strong, the possibility of a further sharp decline in the dollar index was analyzed to be limited.
Researcher Park said, “The dollar continues to weaken due to expectations that the U.S. Federal Reserve will stop raising interest rates,” but added, “The fact that the U.S. economic fundamentals are relatively good compared to other developed countries is a factor limiting the decline in the dollar index.” Reporter Jo Hye-kyung
2023-11-30 00:08:12
#Investment #hawkish #members #Federal #Reserve #turn #doves #dollar #expected #weaken
