Yesterday Fed Chairman Jerome H. Powell’s speech on Central Bank Independence and the Mandate—Evolving Views" give no clue on the interest rate forecast or his view on the upcoming rate decision. At this moment, market expect a 75.3% chance hike 25 bps in 1 Feb 2023 and 24.7% chance to hike 50 bps.
However, in Dec Chairman Powell expressed that despite the tighter policy and slower growth over the past year, we have not seen clear progress on slowing inflation. and the stress on the necessity to bring inflation down to 2 percent over time.
And he think that ongoing rate increases will be appropriate, and the ultimate level of rates will need to be somewhat higher than thought at the time of the September meeting and Summary of Economic Projections, which is 4.75% at that time.
And he stress on that restoring price stability will require holding policy at a restrictive level for some time. History cautions strongly against prematurely loosening policy.
Since the CPI figure slowdown in Nov, market is tipping the Fed will pivot soon, especially when the oil price continue retreated.
A few days ago, Three Fed bosses says interest rates will go above 5% including
Raphael Bostic, president of the Federal Reserve Bank of Atlanta said, “The most recent report showed the Fed's preferred measure of inflation running at a 5.5% annual rate.”
The chief executive officer of JPMorgan, Jamie Dimon even expect Fed will raise rate to 6%. and Goldman Sachs expect ECB will increase rate to 3.25% only. If that is the case, US Dollar still have a big advantage of he rate differential.
From the Fed’s view, Fed will continue to raise rate this year but in a lesser pace, so betting Fed’s will pivot soon is not a good place to buy in medium term
Dollar index weekly chart show’s dollar is entered to oversold zone and it’s already close to the 50% retracement support. Expect DXY finding support in 102.15-102.80
However, in Dec Chairman Powell expressed that despite the tighter policy and slower growth over the past year, we have not seen clear progress on slowing inflation. and the stress on the necessity to bring inflation down to 2 percent over time.
And he think that ongoing rate increases will be appropriate, and the ultimate level of rates will need to be somewhat higher than thought at the time of the September meeting and Summary of Economic Projections, which is 4.75% at that time.
And he stress on that restoring price stability will require holding policy at a restrictive level for some time. History cautions strongly against prematurely loosening policy.
Since the CPI figure slowdown in Nov, market is tipping the Fed will pivot soon, especially when the oil price continue retreated.
A few days ago, Three Fed bosses says interest rates will go above 5% including
Raphael Bostic, president of the Federal Reserve Bank of Atlanta said, “The most recent report showed the Fed's preferred measure of inflation running at a 5.5% annual rate.”
The chief executive officer of JPMorgan, Jamie Dimon even expect Fed will raise rate to 6%. and Goldman Sachs expect ECB will increase rate to 3.25% only. If that is the case, US Dollar still have a big advantage of he rate differential.
From the Fed’s view, Fed will continue to raise rate this year but in a lesser pace, so betting Fed’s will pivot soon is not a good place to buy in medium term
Dollar index weekly chart show’s dollar is entered to oversold zone and it’s already close to the 50% retracement support. Expect DXY finding support in 102.15-102.80