Jerome Powell Speech Today: What To Expect as Fed Ends QT

Federal Reserve Chair Jerome Powell will give a speech today at a Stanford event, just as the December FOMC meeting approaches. His speech comes as the Fed ends quantitative tightening (QT) while the odds of a cut at the upcoming meeting continue to climb, which is a positive for the crypto market.

What To Expect From Jerome Powell’s Speech Today

The Federal Reserve chair will give brief remarks and participate in a panel discussion today at 8 pm ET in honor of the late George Shultz. Crypto market participants will closely monitor the speech for clues from the Fed chair regarding monetary policy.

However, Jerome Powell won’t be making any comments on monetary policy as the speech falls within the Fed’s blackout period. Notably, the Fed chair hasn’t made any public remarks about monetary policy since his October FOMC press conference, when he said that a December rate cut was far from a foregone conclusion.

In the absence of remarks from the Fed chair, market participants have turned to statements from other officials. Two of his key allies, Fed presidents John Williams and Mary Daly, signaled their support for a December rate cut.

It is worth noting that the odds of a 25-basis-point rate cut jumped from around 40% to 70% on the day Williams said they could make a near-term cut, suggesting he will support a December cut. Meanwhile, Daly outrightly backed a December rate cut, citing the weakness in the labor market.

The odds of a December rate cut have since reached new highs following the statements from Jerome Powell’s key allies. CME FedWatch data shows that there is currently an 87.6% chance that the Fed will lower rates at the December meeting.

Quantitative Tightening Ends Today

The Fed is set to end quantitative tightening tonight, which marks a positive for the crypto market. Market commentator Milk Road described this as the week’s biggest catalyst.

They explained that since 2022, the Fed has drained $2 trillion in liquidity as its balance sheet dropped from $9 trillion to $6.6 trillion, which is the most aggressive tightening on record. As such, with the U.S. central bank ending its balance sheet run-off, more liquidity could flow into the market.

However, Milk Road noted that quantitative easing (QE) won’t ramp up immediately but that the simple fact that QT is ending is a step in the right direction. Another positive for QE is that rate-cut advocate Kevin Hassett has emerged as the frontrunner to replace Jerome Powell.

Meanwhile, Bitcoin and the broader crypto market have crashed ahead of Powell’s speech and the end of QT. The flagship crypto sharply dropped below $90,000 yesterday amid reports that the Bank of Japan (BOJ) is considering a rate hike.