The market is waiting for Jerome Powell’s speech, which will take place next Wednesday in anticipation of the decision the central banks (European and US) will have on March 22.
The general consensus of analysts is a 25 basis point increase in interest rates. “We will wait for how long the US central bank will raise its official rates, that is, what the termination rate will be – now the market expects in the interval between 5.25% and 5.50%, the hypothesis with which we will be quite agree -, say at Link Securities.
“Initially, we do not expect Powell to deviate from this scenario when he addresses both chambers, although we will have to be careful what he says about the recent behavior of inflation and how he expects it to behave in the future.” It is also relevant to know, again, your opinion on the state of the US labor market, which has highlighted much more than expected at this point after the strong increase in official rates, when the labor market has the most inflationary connotations”.
“We expect him to keep talking about the need for growth hikes to control inflation and the need for these hikes to remain data-dependent.”
diversity of opinions
The hawkish tone on the part of Powell, who is due to testify before a Senate panel on Tuesday and before a House committee on Wednesday, is likely a reaction from liberals warning the Fed not to inflict pain. market That has been a bright spot for President Joe Biden as he prepares for a tough reelection fight in 2024 and Democrats try to defend a slim majority in the Senate.
Republican lawmakers, meanwhile, may be applauding H’s actions because keeping their focus on ongoing inflation will lower Biden’s approval ratings. The Republican Party of Delegates took control of the legislative elections in November, albeit with a slim majority.
At H, achieving long-term employment strength requires inflation to return to the 2% target set by the Central Bank, from the current 5.4%.
