What we learned from Powell and the Federal Reserve interest rate decision

I might as well start with what Fedwatcher Nick Timiraos wrote:

1. There’s a high bar right now for the Fed to cut rates, but there’s an even higher bar for the Fed to resume rate hikes
2. He’s still expecting inflation to come down, in large part because of the shelter disinflation everyone has expected

For me:

1. Powell was repeatedly baited to say something hawkish or put rate hikes on the table. He deftly avoided every question and made it clear that the two paths the Fed was contemplating were cutting or holding rates here for longer.
2. He also pushed back against the idea that one poor jobs report would put the Fed back into action, saying it would take more than ‘a couple’ of ticks higher in the unemployment rate. Notably, the UNR is currently at 3.8% with the SEP forecasting 4.0% at year end. Keep that in mind into Friday’s non-farm payrolls report
3. The market was clearly fearful of a more-hawkish pivot and is breathing a sigh of relief, quickly pricing out the moves after Monday’s hot wage data

I don’t think there’s much more to say now. We get more top-tier data on Thursday and Friday so we will wait for that.

This article was written by Adam Button at www.forexlive.com.