Fed Chair Powell Sharpens His Message at ECB’s Sintra Forum
During this afternoon’s annual Sintra event, Fed Chair Jerome Powell delivered a calm yet encouraging note to the European Central Bank’s audience. He highlighted that the U.S. economy has made “quite a bit of progress” toward the coveted 2% inflation target, and pointed out the economy is once again on a disinflationary path—a finding echoed in the latest May CPI and PCE reports.
What this Means for Rate Cuts
- Powell’s comments subtly open the door for a possible September rate reduction.
- He emphasizes the risk of delaying the first cut, suggesting it could be too late if pushed further.
- A softer-than-expected jobs report this Friday would make the case for a cut even stronger.
- Markets currently see about a 70% chance of a rate cut—perhaps a touch optimistic.
Market Reaction – A Positive Shift
Powell’s dovish tone has lifted risk sentiment. Equity futures have bounced back into positive territory, and dip buyers keep their reign. The medium‑run path of least resistance is looking bullish, thanks to the Fed’s “Fed put” and policymakers’ clear desire to deliver a 25‑basis‑point cut—and potentially more—sooner rather than later.
Dollar’s Position Amid Disinflation
The dollar has faced modest headwinds, but remains comfortably within recent ranges against most G10 peers. Those ranges are expected to stay stable for the foreseeable future, given the small differences among developed‑market central banks and the synchronized disinflationary trajectory that most major economies are following.
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