Jerome Powell’s upcoming remarks are eagerly awaited by investors, particularly for insights into the Federal Reserve’s stance on interest rate cuts. In his previous speech, Powell hinted at a prolonged period of high borrowing costs, citing ongoing challenges in reducing inflation and the resilience of the labor market.
Recent inflation data, showing persistent underlying inflation, coupled with expectations of a strong employment report, are unlikely to prompt Powell to deviate from his current stance. Following the Fed’s rate decision on Wednesday, where rates are expected to remain at a more than two-decade high, Powell will address reporters. Expectations for rate cuts have been pushed further into 2024, with investors predicting at most two cuts by year-end.
The week will also feature the release of the monthly jobs report, providing fresh insights into the US labor market. Economists anticipate moderate growth in non-farm payrolls in April, maintaining a strong pace amid stable unemployment rates.
Powell Likely to Take Tougher Stance—Fed Meeting Tops Busy Global Market Week (Credits: Fortune)
Bloomberg Economics analysts anticipate a potentially hawkish pivot from Powell, suggesting that he may indicate a reduced likelihood of rate cuts this year. There’s even speculation that he might hint at the possibility of no cuts or perhaps even a rate hike, although it’s not the current baseline expectation.
Additionally, the week will bring updates on employment costs, job openings, and manufacturing figures. Canada’s GDP data for February might show a slight boost, providing the Bank of Canada with more options as it considers shifting towards easier monetary policy.
Elsewhere, economic data from the eurozone and China will shed light on inflation trends and economic growth. Central banks from various countries, including Norway and Colombia, will announce rate decisions, while the OECD will release new global forecasts. The focus will also extend to Asia, with key data releases from China, Japan, and South Korea, alongside trade figures from several countries.
