The Fed is entering a period of silence on Saturday before the interest rate announcement on December 14, and what Powell, who will give a speech at Spelman College, has to say is of great importance.
Powell's speech started at 19:00 Turkey time (UTC+3) and we will be conveying the important parts to you here.
Here are the highlights from Powell's speech:
- The Fed is ready to tighten further if appropriate.
- It is premature to speculate on when policy will ease.
- The FOMC is treading cautiously as risks become more balanced.
- FED policy rate 'has entered the restrictive zone'.
- The FED has made significant progress in reducing inflation.
- The Fed funds range is moving into restrictive territory.
- Uncertainty about the economic outlook is 'unusually high'.
- The FED will increase interest rates again if necessary to reduce inflation.
- It is 'too early' to say that monetary policy is restrictive enough.
- Inflation has decreased but core inflation is still very high.
- We need to see further progress in reducing inflation to 2%.
- I welcome the recent softening in inflation data.
- The FED's actions have maintained its credibility in fighting inflation.
- The Fed is spending more time talking to Congress than before.
- US fiscal policy is unsustainable in the long run.
- To my surprise, inflation has dropped meaningfully this year but growth and employment have continued.
- Inflation is still well above target but moving in the right direction.
- The data will tell the Fed whether it is doing enough or whether it needs to do more.
- We got a lot of reward from the interest rate increases this year.
- The Fed doesn't need to rush now; We get what we want to get.
- There is a way to reduce inflation to 2% without major job losses, and we are on that path.
Following this meeting, Powell and FED member Lisa Cook will hold a roundtable meeting at Spelman College today at 22:00.
Latest economic data in the USA shows that economic momentum slowed down in the fourth quarter, the labor market cooled and inflation declined.
In recent months, there has been an economic forecast war between markets and FED officials. While investors have fairly consistently favored fewer rate hikes and an earlier end to the boom cycle, policymakers have been much more cautious, emphasizing the risks of prematurely declaring victory in the fight against high inflation.
Before Powell's speech, there was a 96.1% chance that officials would keep the benchmark interest rate steady at its current 5.25% to 5.50% level as a result of the meeting, according to the CME FedWatch Facility.
*This is not investment advice.