SAFAKNA TURKEY – Here are the highlights of Fed Chairman Jerome Powell’s speech, which began at 20:40 Turkish time:
- The message from last week’s FOMC meeting was that the process of disinflation has begun, but there is still a long way to go.
- There will be ups and downs in the process Additional rate hikes will be required.
- The employment report was definitely stronger than anyone expected.
- The strong employment report shows why we think it will take a long time. We will probably need further interest rate hikes.
- The Fed expects further rate hikes will be required, but it has not yet reached a sufficiently restrictive level.
- If the data continues to come out stronger than expected, interest rates will almost certainly be raised.
- 2% inflation is the global standard and the Fed has no plans to change it.
- I expect 2023 to be a year of significant inflation reduction. It is almost certain that inflation will fall to 2% next year.
- Because the economy is strong, the labor market is also strong.
- It is encouraging that disinflation started without hurting the labor market. Currently, there is a labor shortage that is structural rather than cyclical. The pandemic has created a long-term labor shortage in the United States, and the gap is considered structural.
- Even though the Fed has the necessary tools to reach the 2% target over time, global events affect inflation.
- We need to be patient, we do not see a decrease in inflation in the service sector.
- The decline in housing inflation has not yet begun, but I predict that it will begin in the second half of this year.
Bitcoin price movement was observed during Powell’s speech:
After Powell’s speech last week, BTC price rallied.
Bitcoin rallyed after Fed President’s speech last week
Investors saw Fed Governor Powell’s speech as an opportunity to clarify where and for how long interest rates would go, as well as clarify comments that were interpreted as dovish after the Fed’s quarter-point increase in funds last week.
Sam Stovall, chief investment strategist at CFRA Research, made the following statement before Powell spoke:
“Just like the Fed is dependent on data, investors are dependent on Powell’s comments. After his speech today at the Economics Club of Washington, I think people will pay attention to see if he has anything new to say.”
Markets began a rally in equities, interpreting Powell’s press conference after the Fed’s decision last week as he believed the central bank had made significant progress in bringing inflation down.
*Not investment advice.
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