Markets were eagerly awaiting Federal Reserve Chairman Jerome Powell’s speech today. Before the speech, gold and Bitcoin prices started to rise. Expectations were that Powell would state that they would continue to act cautiously in his speech. However, after some statements, the Fed President’s speech was postponed due to protesters.
Fed President Jerome Powell spoke briefly, the speech was postponed!
According to the preparations for the speech of US Federal Reserve (Fed) Chairman Jerome Powell to the Economic Club of New York, Powell will say that the significant tightening in financial conditions combined with high bond yields may have effects on policy. Powell would also add that the policy-making committee is “proceeding carefully.” In this regard, he will reiterate that they continue to be careful.
Highlights from Jerome Powell’s speech
According to Reuters, Powell’s appearance on the livestream was postponed due to climate protesters. Important headlines from Fed Chairman Powell’s short speech are as follows:
- Further evidence of above-trend growth or that the labor market is no longer loosening will likely require further tightening of monetary policy.
- The policy stance is restrictive.
- The task of balancing too much tightening with too little tightening is complicated by numerous uncertainties.
- It is still possible that there will be significant tightening.
- Determined to maintain a sufficiently restrictive policy stance.
- It is necessary to pay attention to data showing the durability of economic growth and labor demand.
- Low summer inflation readings were very positive. Also, September data was slightly less encouraging.
- Inflation is still very high.
- The labor market is tight but cooling.
- The economy is very resilient and growing strongly.
- Growth is above the long-term trend, which is a surprise.
- The economy has a stronger demand story.
- The economy may be less affected by interest rates.
- Interest-sensitive spending shows the impact of Fed policy.
- We see politics working through the usual channels.
- I don’t think there is a fundamental shift in the way interest rates affect the economy.
- The fact is that we have a strong economy and employment market, these are the elements we want to see.
- There is no certainty in understanding the lags of monetary policy.
- Markets are following the Fed’s policy changes ahead of time.
- Household savings are higher, spending is higher.
- We must begin to see the effects of monetary policy.
- The Fed slowed interest rates to buy time for policy.
- Long-term potential growth does not change much, around 2%.
- It is very difficult to know how the economy will grow with higher interest rates.
- I don’t know where monetary policy will sit.
- The effective lower bound is a problem for monetary policy, not the economy.
- By any account, neutral rates have fallen in recent decades, I’m not sure where they are now.
- Although the neutral rate may have increased in the near term, it is uncertain in the long term.
- The evidence is not that the policy is too stringent.
- It is possible that we are entering a more inflationary period. However, it is difficult to know this exactly.
- The Fed’s problem is trying to implement the right policy to bring inflation back to 2%.
Market reaction to Jerome Powell’s speech
The interest rate on the benchmark 10-year US Treasury bond fell to 4.9% with the first reaction. The US Dollar (USD) has lost ground against its major rivals. At press time, the Dollar Index (DXY) was at 106.12, down 0.42% on the day.
The gold price rose slightly above its pre-speech level. At press time, gold was up 0.63% to $1,960. However, there was a slight decrease in the price of Bitcoin. BTC, which rose to the level of 29 thousand dollars during the day, fell to 28,650 dollars after the speech. However, there was no drastic move.
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