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22.03.202212:27 Forex Analysis & Reviews: US stock market adequately met the next 0.5% from Powell

Exchange Rates 22.03.2022 analysis

Federal Reserve Chairman Jerome Powell said yesterday that the central bank is ready to raise interest rates by half a percentage point at its next meeting if necessary, turning a more aggressive tone on curbing inflation than it used just a few days ago.

Surprisingly, such an announcement did not make the stock markets sell-off, and the main indices even closed the day in positive territory and continue to grow gently in Europe today:

Exchange Rates 22.03.2022 analysis

The European stock index Stoxx50 also continued its epic rally:

Exchange Rates 22.03.2022 analysis

Policymakers raised their benchmark lending rate by a quarter point at their meeting last week, ending two years of near-zero borrowing costs, and have signaled six more hikes of this magnitude this year based on a median forecast. Powell indicated that half raises could be on the table when politicians convene on May 3-4 and in subsequent sessions.

Powell was more hawkish on Monday than in a press conference after last week's meeting, indicating that if inflation continues to pick up, he will maintain a more aggressive pace of tightening.

Markets heard the chairman's message and reacted sharply, causing Treasury yields to soar as investors raised bets that the Fed would raise interest rates by half a point in May to counter the highest inflation in 40 years.

Economists at Goldman Sachs Group Inc. led by Jan Hatzius took these comments as a hawkish signal and now expect the Fed to raise interest rates by 50 basis points at its May and June meetings and then raise them by four basis points in the second half of the year.

Goldman sees Fed raising 50 basis points in May and June meetings

The Fed chief, who reiterated and elaborated on many of his key comments from last week's press conference, said Russia's military sting operation in Ukraine is aggravating inflation pressures by boosting prices of food, energy, and other commodities "at a time of already too high inflation."

"The risk is rising that an extended period of high inflation could push longer-term expectations uncomfortably higher, which underscores the need for the committee to move expeditiously as I have described," he said

  • European Central Bank President Christine Lagarde among central bank speakers at the BIS Innovation Summit, Tuesday-March 23
  • EIA Crude Oil Inventory Report, Wednesday
  • Bank of England Governor Andrew Bailey, Fed Chairman Powell speech, Wednesday
  • British Chancellor Rishi Sunak's "Spring Statement" on the budget, Wednesday
  • U.S. President Joe Biden attends the emergency NATO summit in Brussels, Thursday
  • Eurozone Markit PMI, Thursday
  • U.S. Initial Jobless Claims, U.S. Durable Goods, Thursday

*这里的市场分析是为了增加您对市场的了解,而不是给出交易的指示。

Andrey Shevchenko,
Analytical expert of InstaSpot
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