Author Introduction: Micro-stock power master – GoldenTrader global investment and trading team
Federal Reserve Chairman Jerome Powell will deliver a public speech on the job market at an event hosted by the Brookings Institution in Washington on Thursday at 2:30 Taiwan time. The public discourse is likely to solidify expectations that the Fed will slow the pace of rate hikes in December (by 50 basis points), while Powell is likely to underscore that the Fed’s battle with inflation will continue into 2023.
After the Fed raised interest rates by 75 basis points four times in a row, Powell’s public speech could respond to market expectations that the Fed will raise the key interest rate by 50 basis points or more at December. But with the current US inflation rate still well above the inflation target of maintaining 2%, Powell is likely to stress in any interest rate statement that interest rates could rise further next year. .
In anticipation of Powell’s public speech, Julia Coronado, founding partner of Macro Policy Perspectives, said, “Powell could be more assertive in this speech about maintaining aggressive monetary policy and could indicate the extent of labor market imbalances.” Coronado said Powell could describe US nonfarm payrolls data as the main reason the Fed has to stick with monetary tightening for the long haul.
According to market futures contract prices, market investors expect the Federal Reserve to slow the pace of interest rate hikes next month and expect interest rates to rise from the current 3.75- 4.00% to a peak of about 5% next year.
Market expectations are in line with Powell’s remarks after the Fed meeting earlier this month, when he said the Fed could slow the pace of interest rate hikes next month, even if interest rates futures will rise to a higher maximum level.
“I don’t think there’s a lot of heavy lifting for the market and the Fed to get inflation in line,” said Michael Feroli, chief US economist at JPMorgan.
Another economist said that “ultimately, Powell will drive the final decision on interest rate policy, reminding the market whether the Fed will become accommodative and continue to tighten policy until there is firm evidence that inflation continues to diminish”.
The minutes of the November Fed meeting showed that the vast majority of Fed officials agreed to slow the pace of future rate hikes. But opinion is unclear on how much higher rates will need to be raised in the end, with policy makers seeing the need to raise rates higher than expected.
According to the final value of interest rate expectations released after the meeting, the market currency interest rate will reach 4.4% by the end of this year and 4.6% by the end of next year. These predictions will be updated at next month’s meeting.
Before Powell’s public remarks Wednesday evening, the United States is to release updated data from the Nonfarm Job Openings and Labor Turnover Survey (JOLTS), a report Powell often cites as evidence of labor shortages. Social wage pressures in the US will also intensify due to an unexpected increase in nonfarm job vacancies in the market in September.
Immediately following Powell’s public remarks, November’s nonfarm payrolls report will also be released on Friday evening, and policy makers will also review the report ahead of December’s interest rate decision, as well as November PCE inflation data on Thursday evening . .
Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said: “Since the November Fed meeting, financial market conditions have improved, equities have risen and risk spreads in the bond market are tightening.” the 5% level Powell signaled earlier, so I think Powell has done his job of signaling the market.”
But Powell is unlikely to mention stock market information in his remarks. Instead, there is a high probability that he will repeat his remarks earlier this month: “The Fed may soon slow the pace of interest rate hikes, but rates may need to be slightly higher. Prices they can only get cold if they fall short of previous expectations.
Author Introduction: Micro-stock power master – GoldenTrader Global Investment and Transaction Combat Team 【】
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