Federal Reserve Chair Jerome Powell emphasized the central bank’s cautious stance on interest rate cuts, indicating it won’t rush into easing despite ongoing market speculation. This reassurance provided some relief to emerging market assets, which had faced sell-offs throughout the week amid the uncertainty surrounding President-elect Donald Trump’s cabinet selections and China’s economic recovery trajectory.
While a December rate cut remains on the table, and two further cuts are likely in 2025, recent strong US economic data has tempered traders’ expectations for aggressive easing. Thursday’s figures underscored resilience in the economy, with producer prices surpassing forecasts and jobless claims falling to their lowest since May, signaling tight labor market conditions. These data points, combined with Powell’s comments, have led traders to scale back their immediate rate-cut bets.
Today offers further clarity on the Fed’s direction as retail sales data is set to be released, alongside speeches from several Fed officials. Many policymakers have recently voiced a cautious outlook, highlighting the balance between supporting growth and addressing persistent inflation pressures.
As markets digest Powell’s guidance and the latest economic indicators, focus will remain on how the Fed navigates this complex environment of robust growth, inflation concerns, and heightened global uncertainty.