The chairman of the Federal Reserve, Jerome Powell, emphasized the FED's cautious stance on the issue of reducing interest rates, which at the same time shows that the FED will not be in a hurry to ease policy despite speculation in the market.
The affirmation provided some relief to market assets such as commodities, which have faced selling pressure all week amid uncertainty over President-elect Donald Trump's cabinet selection and prospects for China's economic recovery.
While a rate cut in December 2024 is still likely, and two more are expected in 2025, recent strong US economic data is seen to calm traders' expectations of aggressive Fed easing.
Yesterday's economic data report showed evidence of the country's economic resilience, with producer prices exceeding expectations and initial jobless claims reported to have dropped to the lowest level since May 2024, at the same time indicating a tight labor market situation.
These data reports, along with Powell's comments, made investors reduce their bets on an immediate rate cut.
Today, more clarity is expected on the Fed's direction when retail sales data is released tonight, alongside remarks from several Fed officials.
Many policymakers have recently voiced a cautious view, stressing the balance between supporting growth and addressing persistent inflationary pressures.
