Fed policymakers set to comment on policy outlook after Chairman Powell sets the tone

• Fed Chairman Powell’s cautious remarks on further policy easing lifted US yields.
• Markets await comments from Fed officials, while assessing the odds of a December rate cut.
• Fed Governor Cook and Governor Bowman are scheduled to delivers speeches on Wednesday.

Federal Reserve (Fed) Chairman Jerome Powell said in prepared remarks delivered at a Dallas event on November 14 that they don’t need to be in a hurry to lower interest rates, citing ongoing economic growth, a solid job market and inflation that remains above the 2% target.

Powell further reiterated that the policy is still restrictive but argued that they need to move patiently and carefully to find the neutral rate. “If data let us go slower, that’s a smart thing to do,” he added. 

US Treasury bond yields pushed higher following Powell’s remarks and the US Dollar (USD) outperformed its rivals in the second half of the previous week. According to the CME FedWatch Tool, markets are currently pricing in about a 40% probability of the Fed leaving the policy rate unchanged at 4.5%-4.7% at the December policy meeting, up from a 17.5% chance a week ago.

Earlier in the week, Kansas Fed President Jeffrey Schmid stated that he believes inflation and employment are both heading toward desired levels. “Now is the time to dial back restrictiveness of policy,” Schmid noted. Commenting on Donald Trump’s proposed policies, “tariff and immigration policies will be relevant to the Fed if they impact employment and inflation,” he said.

Later in the day, Fed Governor Lisa Cook will speak about the US economic outlook and monetary policy at the University of Virginia Department of Economics in Charlottesville, Virginia. Fed Governor Michelle Bowman will deliver a speech titled “Approach to Agency Policymaking” at the Forum Club of the Palm Beaches in West Palm Beach, Florida. Additionally, Fed Vice Chair for Supervision Michael Barr will testify about the oversight of prudential regulators before the House Financial Services Committee in Washington DC. Finally, Boston Fed President Susan Collins will deliver remarks and participate in a conversation at an event organized by the Ford School in Ann Arbor, Michigan.