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European open – Powell tempers expectations

Fed dashes rate cut hopes

Stock markets are looking a little soft now heading into the G20 later in the week after Fed Chair Jerome Powell insisted that the Fed will be insulated from short-term political interests.



Source – Thomson Reuters Eikon [3]

It’s quite clear who that message was intended for but it’s actually investors that it seems to have struck a nerve with. The impression that investors have got over the last week is that the Fed is prepared to cut rates and will start in July but these comments have thrown a spanner in the works.

Interest rate expectations haven’t changed too dramatically though but the odds of 50 basis points have halved. This was also helped by Bullard’s suggestion that 50 points may be overdone and 25 would be sufficient.


Source – Thomson Reuters Eikon [3]

Given he’s one of the more dovish members, that sends quite a strong message. I still think markets are too dovish at the moment, almost trying to force the hand of the Fed. They may end up being successful to a point but the message we’re getting from these latest comments is that they’re may be expecting too much.

Economic Calendar


For a look at all of today’s economic events, check out our economic calendar [6].



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.

Craig Erlam

Craig Erlam [22]

Senior Market Analyst, UK & EMEA at OANDA [23]
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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