The speech of the head of the central bank of the United States Federal Reserve System (FED), Mr. Jerome Powell, on Thursday, November 9, 2023, stimulated further speculation by investors, traders and other financial market participants about a possible further increase in interest rates in the US, already at the next December meeting Federal Open Market Committee FOMC (Federal Open Market Committee), whose members are the only authorized to determine the level of interest rates of the US domestic economy within the framework of the monetary policy of the central bank of the United States of America.
Indeed, in his speech, Mr. Jerome Powell praised the current state of the decline in inflation in the US, but added that he is not sure whether the central bank of the United States Federal Reserve System has done enough to maintain this downward momentum of the decline in the volume of inflation in the US. “The Federal Open Market Committee is committed to achieving a monetary policy stance that is sufficiently restrictive to reduce inflation to 2 percent over time; we are not sure that we have reached that position,” Fed FOMC Chairman Jerome Powell said in his speech. The current rate of inflation in the US has now reached its inflation volume value of 3.7% year-on-year, while as recently as last June 2022, inflation in the US was hovering above 9 percent.
In response to the current economic development of the world’s largest economy, namely the US economy, together with the influence of this so-called intervention speech by the head of the FED, Mr. Powell, investors and foreign exchange market traders reacted with a considerable degree of caution and the exchange value of the US dollar (USD) compared to the beginning of this 45. week of 2023 did not experience significant changes and higher volatility. According to the dollar index DXY (US Dollar Currency Index), the point value of the USD according to this index during the European morning of Friday, November 10, 2023, at approximately 7:56 CET, was at a value of 105.92 USD points, with a daily growth of + 0.01% of the point value according to this index, which compares the value of the USD with another six major world currencies.
Thus, on the indicated day and time, the global currency pair of the single European currency Euro (EUR) and the US dollar (USD) was traded in the forex operations of the foreign exchange market at a mutual exchange rate at a value of 1.066 USD per EUR with a daily decrease of EUR by -0.028 % exchange rate against USD. In his speech, FCOMC FED Chairman Mr. Powell warned investors who are too giddy about the prospect of rate cuts next year, commented Mr. Jeffrey Roach, Chief Economist at LPL Financial. “The Fed will be faithful to its mandate and will increase further if inflation accelerates again,” said this expert. As in recent speeches, Mr. Powell emphasized that the Fed may still be cautious as the risks between doing too much and too little have come into a tighter balance and that the FOMC Fed is tuned to rising Treasury yields, economic reporters said .