Market Commentary: Fed Indicates Patience In Interest Rate Cuts – Powell


In his testimony yesterday, the Chairman of the Federal Reserve, Jerome Powell, did not provide a specific timeline or date for interest rate cuts.

However, he emphasized the positive signs in the country's labor market, following a data report last Friday that showed an increase in the unemployment rate for the third consecutive month.

While Powell's remarks suggested the market was preparing for a rate cut later this year, he stuck to the established economic narrative. Market players predict two interest rate cuts in 2024.

Market players are now awaiting the crucial US inflation report later this week. Although there is an expectation of a rate cut in September, it still depends on the report of CPI (consumer price index) data. Inflation that remains high could change this probability.

Market players are expected to have a clearer view of inflation trends when the consumer price index (CPI) for June is released on Thursday.

Additionally, the US government plans to sell $39 billion worth of 10-year Treasuries on Wednesday and $22 billion worth of 30-year bonds on Thursday.

Powell's cautious approach as well as some economic data to be reported will play an important role in shaping market expectations of the Fed's monetary policy trajectory.