The Federal Reserve has been quite hawkish for several years. They have increased interest rates about a dozen times in the last three years, so they have been the most hawkish among major central banks. The global economy has slowed down considerably during the last year, but the US economy was holding up well despite the global slowdown and the quick tightening of the monetary policy.

Donald Trump hates rate hikes since it dries up liquidity from US markets and he has been cursing the FED for doing so. The FED has been ignoring Trump’s comments and many analysts were supporting the FED. but it turns out now that Trump was right because the US economy has slowed considerably this year. The FED turned pretty dovish in the last meeting and markets priced in nearly a 100% chance of a rate cut in this month’s meeting.

Although, nothing is so certain when it comes to financial markets. So, this speech is quite important, especially after we have seen some decent economic numbers from the US in recent weeks. Now the rate cut is anything but certain.

Besides that, there will be audience questions as well, which will make it even more interesting to watch. The speech should be quite straightforward when it comes to rates – either Powell lets the markets know that it is coming this month which will send the USD lower for a couple of weeks, or he pushes it further along which will likely be bullish for the USD.