The Chairman of the Federal Reserve (Fed), Jerome Powell, expressed confidence in the strength and stability of the United States economy, while stressing that the decision to cut rates in December has not yet been decided.
Powell also reinforced the principle of the Fed's independence, rejected any influence that might arise from the presidential election and insisted that he would not step down even if asked by President Trump.
In a speech aimed at boosting investor confidence, Powell stressed that the fundamentals of the US economy remain strong with a robust labor market and stable growth prospects.
Although Powell refrained from committing to any specific policy direction for December, his remarks reflected a balanced approach, leaving room for flexibility.
This stance is in line with the Fed's recent tone which reflects a more positive view of labor market resilience.
After Powell's remarks, the dollar index edged up slightly in early Asian trade this morning, partially recovering from Thursday's sharp 0.8% drop, the biggest drop since August.
Based on our view at SARACEN MARKETS, if the Fed chooses to control inflation through higher interest rates, the yen may face additional pressure against the dollar, thus increasing volatility in currency markets.
The Fed's latest policy move saw a 25 basis point cut in interest rates, along with several statements indicating a change in economic assessment.
Policymakers acknowledged that "labour market conditions have generally stabilized" and "the unemployment rate has increased but remains low".
