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Powell reiterates Fed is waiting, watching, and can be patient, flexible.

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Fed Chair Powell reiterated the Fed’s cautious stance at the Economic Club in Washington.  Powell noted that the labor market is very strong, wages are increases, and inflation is near the Fed’s target.  The financial market concern for downside risks are affecting concerns for global growth and trade.  With inflation being low and under control the Fed can be patient on raising rates. He stated the Fed is in a place where it can be patient and flexible.

Powell also mentioned that previous Fed chairs have met with Presidents in the past and that he has yet to receive an invitation to meet President Trump.

Regarding rates, the Fed chair reiterated there is not preset path on rates.  He noted they will always use its tools to sustain expansion.  On the economy, he does not see anything showing elevated recession risk.

On China, Powell is concerned as consumer spending and PMI data has been weaker in China.  He still expects another year of solid growth from China, as authorities are continuing to support their economy.  On trade, if we see the end result delivering lower tariffs, that will be a positive for the global economy.

On the balance sheet, Powell would not specify a target, he reiterated they want to return the balance sheet to a more normal level.

The yield on the 10-year Treasuries remained near the session highs at 2.717%.  The dollar held onto gains its gains and stayed near session highs against both the euro and yen.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya

@https://twitter.com/edjmoya

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