Monex: Fed is waakzaam, maar niet in paniek

20 jun 2019

Hieronder volgt een commentaar in het Engels van Bart Hordijk, valuta-analist bij Monex Europe, op de persconferentie van Fed-voorzitter Jerome Powell waarin hij een toelichting gaf om de beleidsrente onveranderd te laten.

Vigilant, but not panicky is how the FOMC communications can be summarized. Federal Reserve Chair Jerome Powell did admit that “significant changes” were made to the rate statement, mostly related to forward looking inflation measures and concerns about the global rate environment. However, when pressed on whether the FOMC would cut rates soon, Powell remained unbowed and repeated that the FOMC would like to see more evidence before jumping into action, as most negative developments were of recent vintage.

This suggests that a July rate cut is too soon and that a September rate cut is more likely. Additionally, it should be noted that the dot plot shows a strong division by a small majority in favour of a neutral stance, while a small minority supports two rate cuts in 2019. First, this may coincide with a sentiment in Powell’s press conference in which he was both confident about the strong labour market and domestic US consumption flowing, while also acknowledging growing global risks. Second, even the most dovish scenario in the current dot plot sees less rate cuts than markets currently price in. In other words, markets price in more rate cuts than all but one voting FOMC member, suggesting they are still ahead of the main scenarios. This implies there is upside potential still for the dollar when market pricing adjusts to even the most likely dovish Fed scenario.

As Jerome Powell through the press conference repeatedly said he wants to see more data, the word “patience” may have been removed verbatim from the rate statement, but was very much still present in spirit during the press conference. Therefore, as the old market adage goes, remember to be back in September.