tl;dr
Federal Reserve Chairman Jerome Powell indicated that the central bank is not eager to cut borrowing rates quickly, stating that the U.S. labor market remains strong and that the Fed is not in a hurry to implement large rate cuts. The Fed recently lowered its benchmark borrowing rate for the first t...
Bitcoin price turns lower as Federal Reserve Chairman Powell indicates cautious approach to rate cuts. Powell suggests Fed not in a hurry to slash rates, hints at moderate reductions. Market reacts to Powell's comments, Fed futures traders tilt towards rate cut at October meeting. Fed's preferred inflation gauge softer than expected, supporting expectations for rate cut.
Federal Reserve Chairman Jerome Powell indicated that the central bank is not eager to cut borrowing rates quickly, stating that the U.S. labor market remains strong and that the Fed is not in a hurry to implement large rate cuts. The Fed recently lowered its benchmark borrowing rate for the first time in four years, with Powell suggesting that two more cuts are expected this year if the economy performs as projected. Market expectations are leaning towards a 25-basis-point rate cut at the Fed’s October meeting, with a softer-than-expected inflation gauge supporting predictions for a 50 basis point cut.
Powell emphasized a cautious approach, stating that the easing process will unfold gradually and that the Fed is prepared to adjust its pace based on economic developments. The price of Bitcoin turned lower Monday as Federal Reserve Chairman Jerome Powell indicated that central bank policymakers aren’t eager to slash borrowing rates. Speaking at a conference held by the National Association for Business Economics, Powell discussed how the U.S. labor market has remained solid as inflation cools. He also suggested that a repeat of this month’s jumbo-sized rate cut shouldn’t be expected at the Fed’s next two meetings. “This is not a committee that feels like it's in a hurry to cut rates quickly,” Powell said during his appearance’s question-and-answer portion. “Ultimately, we will be guided by the incoming data.”
"If the economy performs as expected, that would mean two more cuts this year," he said, adding the federal funds rate would be "50 basis points lower" by year’s end. Meanwhile, Fed futures traders tilted toward a 25-basis-point rate cut at the Fed’s October meeting, as those odds strengthened to a 65% chance from 46% the day before, according to the CME Group’s FedWatch Tool. At the same time, financial-market participants favored a target range of 4.00% to 4.25% after December’s meeting, 75 basis points lower than now.
The Fed’s preferred inflation gauge came in softer than expected Friday, as the personal consumption expenditures (PCE) price index increased 0.1% in August. Showing a 2.2% rise over the past year, the reading came in not far above the Fed’s 2% target. In a note to Decrypt, BRN analyst Valentin Fournier wrote that the PCE reading “supported expectations” for a 50 basis point rate cut at the Fed’s next meeting. Still, “the full impact of the recent rate cut will be analyzed over the next few months,” he wrote.
The cautious sentiment was echoed by Powell himself, who said Monday that policymakers’ base case is that easing will be “a process that will play out over some time, not something that we need to go fast on." The U.S. central bank has tried to position the economy for a so-called soft landing, where inflation falls without a steep rise in unemployment. Even though the Fed has gained greater confidence in that, Powell said the central bank is ready to adjust in response to readings. “If the economy slows more than we expect, then we can cut faster; if it slows less than we expect, we can cut slower,” he said. “We will do what it takes, in terms of the speed with which we move.”
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Technical Analysis Report
Summary:
After a comprehensive analysis of the stock market charts and technical indicators, it is evident that the XYZ stock is currently at a critical juncture. The price has approached a strong resistance level, and the RSI is signaling potential overbought conditions.
Moreover, the moving average convergence divergence (MACD) indicator is showing signs of a bearish crossover, suggesting a possible downward momentum shift. This aligns with the formation of a head and shoulders pattern, indicating a potential trend reversal.
Considering these factors, caution is advised for investors holding long positions. A confirmed breakout above the resistance level would invalidate this bearish outlook. However, until such confirmation, the risk of a downside movement remains high.
It's important to acknowledge that technical analysis has its limitations, and market movements are inherently unpredictable. Therefore, it's crucial for investors to exercise prudence and consider risk management strategies in their decision-making process.
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Moving Average Convergence Divergence (MACD): 2.21
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Dividend Yield: 2.8%
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Beta: 0.0511
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Industry: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES
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