Fed Powell boosts confidence, four rate hikes are on the table, short EUR/USD?
- Powell just admitted at his testimony overnight that "all else being equal," looser fiscal policy should imply tighter monetary policy. This implied that Fed may raise rates by more than three times this year.
- Stocks weakened as Dow plunged almost 300 points. The risk of a four-rate increase is something the stock market has not factored in.
- Powell’s personal outlook for the economy has strengthened since December.
- Powell says incoming data suggests a strengthening in the economy, which adds confidence to the view that inflation is moving back to target.
- He said that every FOMC participant will take recent developments into account in making projections on interest rates in March.
- His optimism on the economy suggested that market is still underpriced without accounting for 2019 hikes
Fullerton Markets Research Team
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