Powell: Not shaken, not stirred - Westpac

Sean Callow, Research Analyst at Westpac, points out that the Fed chairman Powell was interviewed by Dallas Fed president Kaplan on Wednesday and repeated his familiar upbeat view on the US economy, albeit without great detail on the economy or policy.

Key Quotes

“Perhaps most notable was his response to a question on the impact of the stock market on monetary policy. Powell carefully noted the reasons why large moves in equity prices can impact the real economy. But he then deemed the stock market to be “one of many, many factors.”

“This seems a very clear message that the Fed is losing very little sleep over renewed equity weakness.”

“US economic data has not encouraged a rethink of the Fed outlook and Westpac looks for a further 100bp of Fed hikes by Sep 2019, well ahead of market pricing.”

“This should lend substantial support to the US dollar over that time. But near term, there may be some relief for some of the currencies that have been weighed by the steady march higher in US yields this year.”