Federal Reserve Chairman Jerome Powell shuts down March rate cut talk in press conference

The Federal Reserve announced that it would keep the interest rate at 5.5%, unchanged for the fourth consecutive meeting, with an indication that there is currently no intention to lower interest rates.

Investors are looking to interpret the words of the Fed Chairman to know the expectations of interest rate movement at the upcoming March meeting, which is seen by most investors as the first meeting that will see a rate cut.

The Fed Chairman’s speech opened the door to the possibility of a rate cut in the March 2024 meeting, but the Fed Chairman indicated that this is unlikely unless circumstances force them to do so and that May may be the best time to expect a drop.

Key points from the US Federal Reserve Chairman

The current data is good and we are not waiting for better data to include the cut in our decisions, but we are waiting for it to continue for a longer period of time.

Most Fed members know that the decision to cut interest rates soon is the right decision, but we need to gain confidence in the decline in inflation.

All we are looking for is more confidence in the continuation of the downward path of inflation.

We do not yet have anything to indicate that the decline in inflation is sustainable at the moment.

Interest rates are currently at 5.5% at the peak for us.

Inflation is still higher than our demands and goals of 2%.

If we see a strong decline and collapse in the labor market or an increase in the unemployment rate, this will increase the options for cutting interest rates to save the balance of the labor market.

Confusion in gold prices due to hopes of reducing US interest rates this year

Gold prices fluctuated during these moments of trading, today, Thursday, with investors sticking to hopes that the US Federal Reserve will cut interest rates by a large margin this year, even after the central bank backtracked on the idea of a cut in March.

The confusion and variation in the price of the yellow metal comes in conjunction with the significant rise in the US dollar index during today’s trading.

Dollar near 7-week high as bets on March rate cut fade

The dollar held near its highest level in seven weeks against the euro after Federal Reserve Chairman Jerome Powell ruled out the idea of a rate cut in March.

The yen held onto its overnight gains amid falling Treasury yields, after the problems facing the US lender (New York Community Bancorp) prompted investors to seek safe assets.

The pound remained largely unchanged ahead of the Bank of England’s monetary policy decision later today, as investors look for hints about the timing of a rate cut in Britain. The dollar received support from US economic data that suggests the central bank can wait longer before cutting rates.

Powell gave the currency another boost by suggesting no rate cut in March. Federal Reserve officials left interest rates unchanged but abandoned the long-standing signal of a possible further increase in borrowing costs.

“I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting” to cut rates, Powell said at a press conference, referring to the Federal Open Market Committee.

The euro fell 0.12% to $1.0805, down towards a low since December 13, which it hit on Wednesday at $1.0795.

The pound fell 0.09% to $1.2676

Markets Now

The S&P 500 index fell 0.77% at the moment, while the Nasdaq index fell 1.08% and the Dow Jones settled at 38,442.5 points.

Looking at cryptocurrencies, we find that Bitcoin has reduced its losses after the Fed Chairman’s speech. It is now trading at $43,309, down 0.5% instead of 1% after the statement was issued.

Gold and the dollar now

The futures contracts for gold are now down 0.38% to $2,059 an ounce.

While the spot contracts for gold are up by about 0.16% to $2,042 an ounce.

On the other hand, the dollar index is up 0.45% to 103.55 points.

Other metals

Silver fell 0.2% to $22.88 an ounce in spot trading, platinum fell 0.2% to $915.73, and palladium fell 0.1% to $975.56.

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Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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