Fed Chairman Powell is still seeing rate cuts this year.

It was a moment that all traders were anticipating: the release of the ISM Non-Manufacturing data and the speech of Federal Reserve chairman Jerome Powell. 

Indeed, Powell’s opening remarks and discussion at an event at Stanford Graduate School of Business have reassured investors that the Fed is still locking in rate cuts this year.

🎯Despite an acceleration of inflation print in recent data, he is looking past that and still sees a moderation in growth and inflation easing for the year, opening the possibility of interest rate cuts this year. The essence is it might be a while. 

He painted the picture that with a solid economy, a labour market that is rebalancing itself and inflation dripping down to the 2% target, there is much more to do, and the path could be bumpy. 

🥁Given recent data progress, he remains data dependent and stated that it will take a few more inflation data to ascertain whether the January and February data were just a bump or a change in a long-term trend. He acknowledged that the current economic climate means the Fed could stay put on interest rate cuts while assessing inflation progress. 

💰Indeed, he reaffirmed that the easing of monetary policy will depend on the Fed’s confidence in seeing inflation trending to 2% on a sustainable path, which guides the decisions on policy. 

As we flip through the following labour and inflation readings, we will see a tip-toe threading move for investors and traders. 

📪What’s on the menu today?📖

1) At 8.30 pm, we will have the Continuing and Initial Jobless Claims. 

2) At 12.15 am, FOMC Member Barkin will be speaking. 

3) At 2 am, FOMC Member Mester will be speaking again. 

It is Thursday, 4 April, 8.50 am in Singapore and 8.50 pm in New York. The stock market gets relief from the weaker ISM Non-Manufacturing data with a more neutral tone from Uncle Powell’s speech, setting the market for a cool-off from recent market selling. Our hedge will erode our gains as we navigate the market, which is still hovering at its peak. 

We wish all our friends a splendid day at work and school. Stay hydrated and safe. 

Cheers, 

Pika Nat.🧃