As the markets brace for the central bank’s decision on interest rates, Dreyfus and Mellon Chief Economist & Fmr Fed Economist Vincent Reinhart joins Catalysts to provide his insights on the Federal Reserve’s impending decision.
According to Reinhart, in light of the continued hot economic data, Powell’s commentary is likely to convey a "bumpy" sentiment regarding the path of inflation. He acknowledges that the "last mile" to achieving the 2% inflation target is taking "longer than they [the Fed] thought." However, Reinhart emphasizes that inflation is "a lot lower than it was" previously.
Reinhart highlights two key themes that investors can anticipate from Powell’s remarks. First, the Fed typically "leans into the policy action of the previous meeting" to avoid surprising the markets. Additionally, he expects Powell to provide an update on "the slowing of the run-off on balance sheets."
While Reinhart anticipates the Fed to hold rates steady, he questions: "How true to that storyline will Chair Powell be at his press conference?"
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