Powell was questioned by one of his fellow central bankers during a panel discussion at the Fed’s research conference and, according to Reuters, he said overall that the downside and upside risks are roughly balanced, but it is not yet known what the outcome of the interest rate meeting in mid-June will be.
This is also understandable because Powell already announced at the latest briefing on the 25 bp interest rate hike, when the interest rate was raised to the target range of 5-5.25%, that they will consider it from session to session after seeing the incoming data, and for example the month the most important package of macro data, the comprehensive labor market report, will not be published until the beginning of June. And by then, the political tug-of-war on raising the debt ceiling should also be decided, although the negotiations have now stopped, and the situation threatens with the horror of American bankruptcy, with its unforeseeable financial and monetary political consequences.
On the basis of the latest weekly jobless claims data, the priced chance that the Fed will raise interest rates by 25 bps in June jumped to 36% in the market yesterday, even with Powell’s speech today sank back down it’s 20%. The most likely scenario, according to the markets, is that the Fed will stop raising interest rates in June and wait until it has a better view of inflation risks based on incoming data.
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