Bankinter| Fed Chairman Jerome Powell made a statement in which he considered that it is premature to talk about rate cuts. In fact, they are prepared to act by raising rates if necessary. They will continue to take decisions meeting by meeting but monetary policy will remain restrictive until there is certainty that they are close to the 2% target. On the labour market, conditions remain very solid. The recent slowdown is in response to the Fed’s efforts to decelerate growth and thus inflation.
Market sentiment: although Powell’s tone sounded somewhat hawkish, the market interpreted that the Fed has completed the process of rate hikes and might even cut rates in 1Q24.