Jay Powell firmly proposed on Friday that the US Federal Reserve can begin to pull back this year’s major pandemic-inducing stimulus package.
The Fed Chairman said he has completed one of the two goals needed to justify reducing support, adding that “progress” is being made to the other.
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Powell reaffirmed his view that the US economy has backed up strongly following the pandemic, but he said he is confident that America is heading in the right direction to bring back that high level of support. .
“My view is that a ‘significant further progress’ test is being met due to inflation,” Powell said Friday. “There have also been obvious progress towards the greatest employment.”
Previous reports suggest that Fed officials consider this year the right time to “taper” the bonding measures that Powell currently agrees to.
“This year’s Jackson Hole agenda focuses on the word ‘uneven’ and I’m reading it more altruistic than ever,” said Hinesh Patel, portfolio manager at Quilter Investors. . “Monetary policy setters, researchers and influencers will discuss frameworks that will not only survive the pandemic, but will also impact our lives over the next decade. Powell’s speech tells us that central banks will be able to delta around the world. It’s proof that we are looking beyond the surge in cases.”
“The global financial crisis, monetary policy and fiscal policy have become a tug of war, but today it is clearly operating as synchronous swimming. The Federal Reserve has more financial responses. It clearly decided that it was time to take up sagging.” Patel said.
“Powell is very clear that tapering will come later this year and should be well prepared to avoid all kinds of tantrums, but to ensure that the credit terms remain optimal. , as we move into a new era of monetary policy, central banks will ultimately have to hold the hand of financial markets.”
Dollar
The US Dollar Index (DXY), which measures greenback against competing currencies, rose to 92.79 on Friday, a new four-day high.
The Index created additional grounds in response to the aforementioned Hawkish statement from Powell.
Greenback surged to the beginning of this week, and on Friday the dollar index hit a nine-month high of 93.734, fearing the economic impact of the dollar.
Vasileios Gkionakis, global head of Lombard Odier Group’s Forex strategy, told Reuters it’s slippery than growth and sector rotation, which increased the dollar due to its safe haven status.
“In the short term, we are still trading in the range and we are biased upwards,” added Gkionakis.
gold
Gold prices rose to $1,800 per ounce when Jerome Powell made his remarks about potentially pulling stimulus measures this year.
$Gold Price pushed to $1,800 per ounce in the first reaction #powellComment from. December futures last traded at $1,800.90 per ounce, up 0.30% per day.
– Kitco News (@kitconewsnow) August 27, 2021
