Jerome Powell's hawkish comments don't bother investors 📃

Federal Reserve Chair Jerome Powell provided a comprehensive overview of the current economic situation, highlighting several key points. Powell noted that inflation in the first quarter showed a notable lack of further progress, and while there are signs of gradual cooling in the labor market, it remains as tight as it was before the pandemic. He pointed out that despite ongoing labor shortages in many industries, the overall picture of the U.S. economy is positive, with strong consumer spending and business investment. Powell expressed a slightly lower confidence in inflation moving back down as swiftly as anticipated and acknowledged that the restrictive monetary policies may take longer than expected to yield results.

On the Producer Price Index (PPI), Powell described the reading as mixed rather than hot, indicating a nuanced view of inflationary pressures from the production side. He suggested that a rate hike is unlikely in the near future, with a preference to maintain the current policy rate. Despite progress on inflation, Powell highlighted that non-housing services inflation might take the longest to subside due to various lags in the economic data, particularly in housing. He emphasized the need for patience, as the path to achieving the desired inflation levels might be longer and more complex than initially expected.

USDIDX (H1 interval)

Despite the relatively hawkish tone adopted by the Fed chairman, the dollar index is not reacting with increases. In fact, we are currently seeing the opposite reaction and further declines, which are combined with a simultaneous rebound on the indices. 

Source: xStation 5