U.S. Federal Reserve Chair Jerome Powell is currently testifying before the House Financial Services Committee and will continue his testimony at the Senate Banking Committee tomorrow. During the hearing, Mr. Powell clearly stated his views on interest rate policy in the near future, leading investors to believe that the FED will maintain current interest rates rather than cut them.
According to Mr. Powell, there is currently insufficient basis to begin loosening monetary policy, due to several lingering risk factors. Notably, he warned that inflation could rise again this year, primarily due to the impact of newly imposed tariffs. He emphasized that the only thing people can expect at this moment is price stability, as the FED remains cautiously monitoring economic developments.
In particular, he also mentioned the housing sector in the U.S. – one of the key factors affecting the inflation index – noting that this market is facing a prolonged supply shortage, which is an issue beyond the control of the FED.
With these views, Mr. Powell indicated that the central bank is likely to continue keeping current interest rates until there is clearer data on the actual impact of tariff policies on price levels.
Data from the market currently shows that the expectation of maintaining the FED's interest rates at the July meeting is at 81.4%, while the probability of keeping rates unchanged at the September meeting is 66.4%. These figures reflect investors' confidence that the FED will prioritize caution rather than hastily loosening monetary policy in the short term.
Source: Allinstation by HC Capital