Fed Chairman Powell's comments suggest the FOMC is unlikely to cut rates when it meets at the end of this month

Federal Reserve Chairman Jerome Powell said "more good data" would bolster confidence that inflation is moving toward the Fed's 2% target, with recent data showing "further modest increases" in prices. In testimony prepared for a Senate hearing on Tuesday, Powell warned that cutting rates too little or too late could put the economy and labor market at risk. "Rising inflation is not the only risk we face," he said. "Reducing policy constraints too late or too little could unduly weaken economic activity and employment and hinder or reverse the inflation process." Powell's comments suggest the FOMC is unlikely to cut rates when it meets at the end of the month. U.S. Treasury yields fluctuated but moved higher on the day, and the S&P 500 held its gains after Powell's testimony. Traders are pricing in a slightly higher than 70% chance of the Fed's first rate cut in September. They expect two 25 basis point rate cuts in 2024. (Jinshi)