Federal Reserve Chairman Jerome Powell's Speech Is Receiving Great Attention!

Posted on November 2, 2023 2:52 AM
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The U.S. Federal Reserve (Fed) decided not to change its policy interest rate in November, keeping it in the range of 5.25% to 5.5%. Following the meeting, Fed Chairman Jerome Powell held a press conference at 21:30 (UTC) to discuss the policy outlook and answer questions.

The Fed's interest rate decision did not have an immediate impact on gold and Bitcoin prices as the market had already priced in no changes in interest rates. The U.S. Dollar Index experienced a slight decline after the decision.

In its policy statement, the Fed noted that economic activity had expanded strongly, with unemployment rates remaining moderate but continuing to increase strongly. Inflation continues to remain high. The Fed emphasized that it would determine the extent of additional policy tightening considering the course of economic factors.

According to the Federal Open Market Committee (FOMC), there is still about a 20% probability of a rate hike before the end of the year. Economists at ABN Amro have suggested that the Fed's tightening cycle has come to an end and no rate hikes are expected in the coming months. Falling inflation could raise real interest rates, and the recent surge in bond yields represents a significant tightening of financial conditions.

Here are the key statements made by Jerome Powell:

"We are committed to bringing inflation down to 2%."

"An economy cannot function without price stability."

"The full effects of tightening have not been felt yet."

"We are proceeding carefully amid uncertainty."

"The economy has grown well beyond expectations."

"The labor market remains tight."

"We will make decisions based on the integrity of data and risk balance."

"Strong employment increases, but lower than in previous periods."

"Nominal wage increases show some signs of softening."

"Labor demand still exceeds supply." "Inflation has slowed since the middle of last year."

"There is still a long way to go to bring inflation down to 2%."

"The policy's restrictive stance is putting downward pressure on inflation."

"We are determined to be sufficiently restrictive."

"We are not sure if the policy is restrictive enough."

"We are looking at the latest data on economic conditions and labor demand to decide if more tightening is needed."

"Bringing down inflation will likely require growth below potential and easing working conditions."

"Inflation is decreasing, but still significantly above the target."

"We are not sure if the policy is sufficiently restrictive."

"We are monitoring the increase in long-term yields."

"The tighter financial conditions arising from higher long-term interest rates, a stronger dollar, and lower stocks could be significant for future interest rates."

"We have not made any decisions regarding future meetings."

"The belief that it would be difficult to resume interest rate increases after a pause is not accurate."

"Financial conditions are clearly tightening. This will have an impact over time, but we do not know how fast."

"We see the effects of high interest rates on the housing market and durable goods purchases."

"We are absolutely not considering an interest rate cut right now."

"If we decide that we need more tightening, we will do it (referring to interest rate hikes)."

"The main question is: Should we make more increases?"

"There are too many risks. Government shutdown is a potential risk."

"We and our colleagues still believe we need to see a slowdown in slow growth and labor market conditions."

"We are now seeing the effects of interest rate hikes in 2022."

"We have come a long way in the interest rate hike cycle, and we are approaching the end of the cycle."

After the FED interest rate decision and Powell's speech, the following instant market movements were observed: