The big question is: What happens after the fed funds rate gets to ‘neutral’, which is somewhere between 2.50%-3.00% in the Fed’s view.
We may have just gotten an answer.
“While inflation has recently moved up near 2 percent, we have seen no clear sign of an acceleration above 2 percent, and there does not seem to be an elevated risk of overheating,” he said.
Powell comments on inflation suggest he will wait and see, rather than continue to tighten. That’s a potential watershed for financial markets.
To be sure, it’s nothing definitive but a decision by the Fed to go to the sidelines would be a negative for the US dollar and positive for risk assets. – Neal Bhai Reports (NBR)
