Powell says Fed’s next move likely won’t be a rate hike

During the question-and-answer session, Powell said he was aware that the Fed faces double-edged risks. If the Fed starts cutting rates too early and too aggressively, the central bank could jeopardize the progress it has made on inflation. If the Fed cuts rates too late, it will put too much pressure on the economy.

Speaking about the next step, Powell noted that a rate cut was more likely than a rate hike.

The US dollar index gained ground as traders reacted to Powell’s comments. On a broader note, the US dollar index is attempting to rebound after pulling back from June highs.

Gold pulled back from session highs as traders focused on the rebound in the US dollar. It’s worth noting that potential rate cuts are bullish for gold markets, so it remains to be seen whether gold’s pullback will be sustainable.

The SP500 settled near the 5,590 level as traders remained optimistic. Powell’s testimony did not come as a surprise, which is good news for stocks. As the Fed slowly moves toward the start of the rate-cutting cycle, equity traders can remain focused on the potential of AI technology.

For an overview of all today’s economic events, check out our economic calendar.

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