According to Bloomberg on Jerome Powell speech, the Federal Reserve will clarify the conversations from their meeting in June that confused Wall Street ahead of Jerome Powell’s speech. After 10 straight rises over a period of 15 months, the Federal Open Market Committee decided to stop raising interest rates, even though inflation was slowing down more slowly than expected. In addition, policymakers foresaw two more increases this year, which further confused markets in light of Jerome Powell speech.
According to Kathy Bostjancic, chief economist at Nationwide Life Insurance Co., the central bank and Chair Jerome Powell “have given a confusing statement and I assume it reflects an uncomfortable compromise the committee where hawks and doves are members.” Thus, there will be lots of clarifications from the Jerome Powell speech.
“Even though there was an awkward explanation from Powell, the minutes might still provide insight on that,” said Bostjancic. This may also cause further misconceptions based on the Jerome Powell speech.
Derek Tang, an economist with LH Meyer/Monetary Policy Analytics, noted that despite the uncertainty, a rate increase in July is most likely because failing to do so twice in a row would make it impossible for the Fed to continue its rate-hiking cycle in two successive sessions. Regardless of the speech by Jerome Powell, it is anticipated that the minutes will remain flexible, with a larger potential peak rate and a variety of opinions on the right moment based from Jerome Powell speech.
Jerome Powell, Chairman of the Board of Governors of the Federal Reserve System | Photo: USNews
In line with this, the Fed really wanted to justify parts of the Jerome Powell speech in order to be clarified with certain things to calm various investors. Jerome Powell speech was considered to be confusing to some investors as it provided hanging information.
Before the July 25–26 meeting, the Fed will get two important economic reports: the June consumer price index and the June employment data and clarifications from the Jerome Powell speech. Policymakers have placed a greater emphasis on core prices as stated in the Jerome Powell speech, which do not include food and energy, and have increased by 4.6% since May 2022 as opposed to the broader gauge’s 3.8% increase as mentioned in the Jerome Powell speech.
