Greg Gibbs, analyst at Amplifying Global FX Capital, points out that the Powell has emphasised in the latest Fed meeting that the Fed will be more data-dependent.
Key Quotes
“He has also said that they will (and have) looked at financial market developments. This appeared in their policy statement. However, even though financial conditions have tightened significantly, arguably to a high since 2016 when the global economy was experiencing significant upheaval, the Fed hiked rates anyway.”
“If the Fed was only looking at economic data, it could explain a hike in December. So it does appear that the Fed has been economic data dependent. But it has shown a tin ear when it comes to financial market conditions.”
“Powell said that the tightening of financial conditions made the Fed downgrade its growth and rates forecasts (i.e. projecting three hikes over two years instead of four hikes projected in September).”
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