Summary:
Jerome Powell spoke at Harvard University; remarks interpreted as neutral to slightly dovish, stating the Fed may look through temporary supply shocks, highlighted labor market downside risks, and emphasized a data-dependent approach with rates near neutral.
Powell indicated that U.S. government debt is not the main driver of current inflation, with more focus on supply shocks, inflation expectations, and labor market conditions.
Market-implied probability of an April rate hike dropped to ~2.6%.
Recent U.S. data showed economic softening alongside persistent inflation:
Nonfarm payrolls: –92,000 (Feb 2026)
Retail sales: –0.16% MoM (Jan)
CPI: ~2.4% YoY; Core PCE: 2.83%
Key macro conditions: Middle East tensions driving higher oil prices, inflation above target, and slowing economic momentum, creating a trade-off between inflation and growth.
Market structure and forward drivers: buyback blackout period approaching, weaker retail participation vs 2025, with focus on upcoming nonfarm payrolls, CPI, and Federal Reserve meeting.