Global markets are locked on US inflation figures. The importance of the inflation data increased further after cautious messages from Fed Chairman Powell. Clues regarding Fed’s monetary policy will be sought in the critical data.

In global markets, a mixed trend emerged with US President Donald Trump’s tariff decisions and Federal Reserve (Fed) Chairman Jerome Powell’s statements that they will continue to be cautious about interest rate cuts. While the inflation-recession dilemma continues worldwide, Trump’s tariff decisions on important trading partners of the US and signing a decree imposing a 25% tariff on steel and aluminum imports fuel concerns about potential escalation of “trade wars”. President Trump’s decisions could increase inflationary pressures in the US and fears that the Fed, which has made significant progress in fighting inflation so far, may narrow its policy space in the future also stand out as another factor complicating pricing. INFLATION AND POWELL’S MESSAGES TO BE MONITORED In addition, signals from today’s inflation data to be announced in the US and Fed Chairman Powell’s presentation to the House Financial Services Committee are closely monitored.

Clues regarding Fed’s projections will be sought in the aforementioned inflation data.

In the US, January inflation is expected to remain steady at 2.9%.

CAUTIOUS STATEMENTS FROM POWELL On the other hand, Fed Chairman Powell started his presentation of the semi-annual Monetary Policy Report to the US Congress yesterday. Participating in the session held by the Senate Banking, Housing and Urban Affairs Committee on the first day of the presentation, Powell stated that the US economy is generally strong and has made significant progress in line with the bank’s goals over the past 2 years. Powell mentioned that labor market conditions are cooling but staying robust, and inflation is very close to the long-term 2% target, but still remains slightly high. The Fed Chairman said, “Due to our policy stance now being significantly less restrictive compared to before and the economy continuing to remain strong, there is no need for us to rush to adjust our policy stance.”