US Federal Reserve Chair Signals Potential Rate Hike in Future
During a post-Federal Open Market Committee (FOMC) press conference, US Federal Reserve Chair Jerome Powell delivered a speech discussing the current stance of policy and the Fed’s goals. The FOMC had previously decided to keep interest rates steady at 5.25-5.50%. Powell acknowledged that the Fed still has a long way to go before achieving its 2% inflation target but emphasized their determination to do whatever is necessary to reach their goals. He also mentioned that a majority of policymakers believe another rate hike is likely.
The proposal to maintain the current policy stance received unanimous support from policymakers, and this decision had little impact on Bitcoin prices initially.
Prioritizing Inflation Target
The FOMC recognized that inflation remains elevated while unemployment rates remain low. The Fed staff prioritizes bringing inflation down to the 2% target over time. The CME FedWatch Tool currently shows a 36.3% chance of a rate hike to 5.50-5.75% in the November FOMC meeting, reflecting market sentiment.
On a positive note, Chair Powell stated that there will come a point in the future when it would be appropriate to cut interest rates. He emphasized that the Fed now has more flexibility to proceed cautiously with rate hikes as they approach their inflation target.
Market Reaction and Hot Take
In response to Powell’s speech, the S&P 500 Index experienced a slight drop of 0.30%. This may be due to the hawkish nature of his remarks regarding potential rate hikes. Overall, Powell’s speech indicates that the Fed is committed to achieving its inflation target and suggests that future rate hikes may be on the horizon.
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