US Fed and Jerome Powell in market spotlight

Posted 19 June, 2019

The US Federal Reserve 2-day meeting is coming to an end today. The middle of the week can be quite challenging for the US Fed Chairman Jerome Powell. 

Over the past weeks, monetary officials many times noted a possibility of the interest rate reduction in the country to secure soft conditions for the economy to struggle with the external tensions. As a result, Jerome Powell is likely to announce the decision of the US Central Bank regarding a further monetary move to ease the policy or maintain the current rates for a while.

The current interest rate set by the US Federal Reserve is in the target rage of 2,25-2,50% per annum. It is highly possible that the Central Bank will not revise it today. This decision can partly be related to the upcoming G-20 Summit to be held in Osaka, Japan, next week. In particular, the US Fed will gather and analyze all data to be ready to reduce the rate by July in case of the negative scenarios.

It is natural that the USA needs to take such steps especially after it launched trade conflicts worldwide. Washington needs to support US economy until it remains in trade wars (China, Mexico, India).

Capital markets are expected to see signs of the interest rate revision to take place soon. The stock exchange indices include such scenario in July with the 82% probability.

The euro-to-US dollar exchange rate can slightly rise if Jerome Powell sticks to careful rhetorics in his statements regarding assessments and market signals. At the same time, the financial markets will be ready for the greenback and securities collapse in case of the hawkish stance.

Previous forecast

04 July, 2019 16:39

← Investors hardly want to risk switching to safe havens again

The agreement that was achieved between Washington and Beijing at the G20 Summit failed to promote a long-lasting demand for risk. For now, investors are still full of concerns and thus prefer to buy safe havens...The risk of the downward movements in the market given reasons to believe that even-bigger economic slump is ahead.

Investors hardly want to risk switching to safe havens again

Next forecast

24 May, 2019 14:39

Bank of Japan expected to hint further monetary position at upcoming meeting →

Japan has unveiled the report about April changes of the national CPI. According to the released figures, the inflation in Japan rose 0.9% y-o-y, while the forecasts suggested a less significant increase of 0.4%. The March inflation results were 0.5% up y-o-y. This means that the country's Central Bank can consider upward revision of the interest rate to move it above the negative line or at least set the rate at zero lines if the inflation continues growing in Japan.

Bank of Japan expected to hint further monetary position at upcoming meeting
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