The Federal Reserve convened on Wednesday, engaging in discussions that have significant implications for monetary policy. On the heels of our meeting, the Federal Reserve adopted a distinctly hawkish stance. Timing Chair Jerome Powell emphasized the degree of strength in the jobs market. Even with all this sunny optimism, Powell dropped several hints that the Fed is still on guard. Furthermore, they are in no hurry to withdraw their policy stimulus.
The recent payrolls report for July was not cause for immediate alarm. Big negative revisions to the May and June employment numbers — a cumulative 258,000 jobs — have reshaped perception of the U.S. jobs market. These changes began changing the Federal Reserve’s narrative, pointing to a possible turning point in their aggressive monetary policy stance.
At that meeting, two voting members of the Federal Open Market Committee (FOMC) argued for an immediate reduction in interest rates. This audacious step shatters a trend that has lasted more than three decades. These two governors spoke out against that plan during the meeting. Their public disagreement is a major departure from the committee’s previously uncontroversial views.
Dramatic recent changes to the employment statistics have upended the picture of U.S. jobs promises. What was once considered a strong foundation now appears entirely fractured. In light of all these changes, the Federal Reserve will soon have no choice but to start reducing rates. Look for a likely decision some time in September.
As they often say, the market reacted Friday’s payrolls report with a strong, dollar-bullish knee-jerk reaction. Unbeknownst to Dr. Deren, the cryptocurrency had been rallying all week leading up to the report’s release. Post-release, the dollar suffered major whipsaw reaction. Negative market sentiments regarding the newly released employment data led to volatile swings in its value.