Jerome Powell, the Chairman of the US Federal Reserve, delivered an important speech yesterday, where he provided clarifications on monetary policy and inflation. Here are more details about the speech and its impacts:
*Key Statements by Powell:*
- *Inflation*: Powell confirmed that the Federal Reserve is working to reduce inflation to its specified target of 2%. He noted that inflation is still gradually decreasing as a result of recovering from the major economic shocks that occurred in 2021 and 2022.
- *Interest Rate*: The benchmark interest rate was lowered by 25 basis points to a range of 4.25%-4.5%. This decision reflects a monetary policy aimed at achieving economic stability while continuing to face inflation challenges.
- *The US Economy*: Powell indicated that the US economy is doing very well, and there are no reasons to believe that a recession is more likely than usual.
*Impact of Powell's Speech on Markets:*
- *Stocks*: Technology stocks rose after Powell's speech, while the Dow Jones index declined. This reflects investors' expectations that monetary policy will remain accommodative to support economic growth.
- *Gold*: The price of gold fell below $1,800 per ounce. This may be a result of expectations for rising interest rates or an improving US economy.
- *Oil*: The price of oil rose after Powell's speech. This may be a result of expectations for increased oil demand due to an improving US economy [1].
*Future of Monetary Policy:*
- *Interest Rate Cuts*: Any future decisions regarding additional interest rate cuts will primarily depend on incoming economic data, especially concerning inflation rates and labor market performance.
- *Monetary Policy*: The Federal Reserve intends to proceed cautiously in the next phase, as hasty decisions could lead to economic instability [3].$BTC
