- Jerome Powell’s testimony before the US Congress is a key market-moving event this week.
- Investors await fresh insights on the Federal Reserve’s interest rate trajectory.
- The US Dollar, stock markets, and other asset classes may experience significant volatility based on the Fed Chair’s remarks.
Federal Reserve Chairman Jerome Powell is set to deliver the Semi-Annual Monetary Policy Report before the Senate Banking Committee on Tuesday at 15:00 GMT, a highly anticipated event for financial markets. Powell will outline key insights from the Fed’s latest report, which reiterated that financial conditions remain “somewhat restrictive” and that policymakers will continue to assess economic data before making future policy decisions.
During an extended Q&A session, lawmakers are expected to question Powell on interest rate policy, inflation trends, and the broader economic outlook. Additionally, discussions may touch on the potential impact of US President Donald Trump’s economic policies on inflation, growth, and monetary strategy. The CME Group FedWatch Tool currently indicates less than a 10% probability of a 25-basis-point rate cut in March, following a recent employment report that highlighted continued labor market strength.
In January, Nonfarm Payrolls (NFP) increased by 143,000, slightly below expectations of 170,000. However, the US Bureau of Labor Statistics (BLS) revised previous job figures upward, adding a total of 100,000 jobs to prior estimates. Despite Powell’s expected reaffirmation of the Fed’s current stance, market positioning suggests limited upside for the US Dollar (USD). If Powell signals a potential rate cut in the near term, the USD could face selling pressure.
About Jerome Powell (via FederalReserve.gov):
Jerome H. Powell has served as Chair of the Federal Reserve Board of Governors since February 5, 2018. Reappointed for a second four-year term on May 23, 2022, he also chairs the Federal Open Market Committee. Powell first joined the Board of Governors in 2012 and was reappointed in 2014 for a term extending through January 31, 2028.
