The press conference of FED chairman Jerome Powell is heading towards its end.
- Here are they key takeaways from the opening statement:
- The Fed's actions are aimed at supporting the economy until the recovery is complete
- Growth should continue at a strong pace, albeit slightly lower than previously expected
- Sectors that have been hit by the pandemic have little rebound
- Conditions in the labor market are improving, employment in August fell in terms of the pace of growth
- The Fed will react if inflation remains higher than expected
- Inflation will be elevated, but will decline towards next year
- Interest rates will not be raised until the labor market reaches full employment as determined by the Fed
- A gradual tapering process that concludes around the middle of next year is likely to be appropriate
Below we present some key takeaways from the Q&A session:
- Inflationary conditions are reached, now the Fed wants to meet the goals related to the labor market (but at the same time does not say that the inflation targets have exceeded expectations and prices need to be cooled down)
- When the progress of both Fed goals is visible, then the decision will be made when to start the taper, does not rule out the next meeting
- Many Fed members believe that the improvement in the labor market is already significant, Powell believes that the progress is not enough
- Powell "guesses" that the tapering could start early next year
It seems that the Fed sees a chance to announce a tapering at the next meeting (of course, the September data will be of key importance here).
Comments regarding the tapering cause the dollar to strengthen and the gold to weaken. Source: xStation5
The content of this report has been created by X-Trade Brokers Dom Maklerski S.A., with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. X-Trade Brokers Dom Maklerski S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.