During a congressional hearing on Tuesday, Federal Reserve Chairman Jerome Powell announced that the central bank is expecting to raise interest rates multiple times in the coming months. Powell also stated that the Fed would be ready to speed up its monetary policy tightening if necessary. This announcement is consistent with previous hints from other Fed officials and was made to communicate the Fed's plan to raise interest rates by 50 basis points next time.
However, if the Fed does raise interest rates by 50 basis points, it may indicate that the previous increase of 25 basis points was insufficient. Accelerating the pace of rate hikes may also raise concerns about the Fed's policy decisions. It is uncertain whether the Fed will raise rates by 75 basis points next time, which could cause turbulence in the financial system.
In addition, the US government has stopped issuing bonds due to the debt ceiling, but when bond issuance resumes, there are two potential outcomes. One possibility is that an increase in supply will cause bond interest rates to rise. The other possibility is that demand will remain strong, minimizing the impact. If interest rates rise due to increased supply, it could put upward pressure on the dollar.
As the dollar strengthens, the pound is weakening and is currently testing its neckline. If the pound breaks below this neckline, it could lead to a double top test of 1.12-1.14.
However, if the Fed does raise interest rates by 50 basis points, it may indicate that the previous increase of 25 basis points was insufficient. Accelerating the pace of rate hikes may also raise concerns about the Fed's policy decisions. It is uncertain whether the Fed will raise rates by 75 basis points next time, which could cause turbulence in the financial system.
In addition, the US government has stopped issuing bonds due to the debt ceiling, but when bond issuance resumes, there are two potential outcomes. One possibility is that an increase in supply will cause bond interest rates to rise. The other possibility is that demand will remain strong, minimizing the impact. If interest rates rise due to increased supply, it could put upward pressure on the dollar.
As the dollar strengthens, the pound is weakening and is currently testing its neckline. If the pound breaks below this neckline, it could lead to a double top test of 1.12-1.14.