Powell Speech Preview: Fed chairman to give clues on future monetary policy
- Jerome Powell will answer questions from the press after the Fed Interest Rate Decision.
- Any hints on the future monetary policy can trigger significant market moves on US Dollar and other asset classes.
Jerome Powell, Chairman of the Federal Reserve System (Fed), will speak in a press conference on Wednesday at 18:30 GMT, 30 minutes after the Fed Interest Rate decision is announced. Powell’s speech will reflect the current views of the Federal Open Market Committee (FOMC) on monetary policy.
The Federal Reserve is widely expected to deliver a 25 basis points interest rate hike, setting the Fed funds rate in the 5%-5.25% range. Powell’s press conference will provide hints on whether this might be the last interest rate hike of this cycle, or if rather the monetary policy tightening might continue in the coming months.
Jerome Powell will face tough questions by the press on whether the Federal Reserve can keep going with its interest rate hikes, considering the financial stress that the banking system has suffered recently, with First Republic Bank having been taken over by JP Morgan in the past week. Powell’s words will carry enormous importance for the market, with the US Dollar and the US Treasury bonds being the most-affected assets, and in turn, triggering volatility in most asset classes.
According to Yohay Elam, Senior Analyst at FXStreet, Jerome Powell will keep the door open to both tightening and easing policy scenarios, exerting caution. Elam expects Powell’s press conference to support the US Dollar, weighing down on Gold price and the stock markets:
Uncertainty means keeping all options on the table. Fed Chair Powell is set to reject any notion that the bank is done hiking in his press conference. He will go beyond token remarks of "doing what is needed" and firmly place another 25 bps hikes on the table.
In response to such remarks – and sticking to the bank's projections of refraining from cuts until year-end, markets may reverse course. Stocks and Gold would stumble, while the US Dollar would advance on such developments.
About Jerome Powell
Jerome H. Powell first took office as Chair of the Board of Governors of the Federal Reserve System on February 5, 2018, for a four-year term. He was reappointed to the office and sworn in for a second four-year term on May 23, 2022. Powell also serves as Chairman of the Federal Open Market Committee, the System's principal monetary policymaking body.
Powell has served as a member of the Board of Governors since taking office on May 25, 2012, to fill an unexpired term. He was reappointed to the Board and sworn in on June 16, 2014, for a term ending January 31, 2028.