Powell's speech will give a clear signal, this is what investors need to know


Federal Reserve Chairman Jerome Powell headed to the White House today (Wednesday) to give a clear signal to the market about how the central bank plans to continue its monetary policy this year.

In the past few months, the United States (US) economy witnessed dynamic changes between the financial market and the Federal Reserve (Fed) regarding the expected interest rate cut in 2024.

Markets have had to adjust their collective view from an accommodative central bank to more caution.

Powell's congressionally mandated testimony before members of the House and Senate will provide a more detailed look without causing concern in Wall Street markets.

Among the topics that need to be given high attention is the issue of inflation where the market predicts that the Fed will need to reach the 2% target before implementing interest rate cuts.

Inflation readings at the end of 2023 show a clear trend towards important targets. However, January's report provided a surprising answer with consumer price data especially in the protection sector remaining high and creating an upset in the trend.

Now, Powell will have to carefully analyze the latest trends before addressing the House Financial Services Committee and the Senate Banking Committee tonight.

In addition, he will also have to face challenges regarding the mixed US labor situation where the unemployment rate is down by 3.7% and the recent high surge in cryptocurrency prices.

Earlier, Atlanta Fed President Raphael Bostic voiced concerns about uncertain expectations after he spoke about a forecast of interest rate cuts last Monday.

Due to the presidential election in the United States, Jerome Powell and his officials are on a mission to reduce interest rates immediately.

Senator Elizabeth Warren also called for the Fed to immediately implement it because there are various issues related to the low household income of the people.