(Alliance News) - Futures indicate an opening bias -- albeit modestly -- downward on Wednesday, after Federal Reserve Chairman Jerome Powell said yesterday that the U.S. economy, while strong, has not seen inflation return to the central bank's target, indicating the further unlikelihood of interest rate cuts anytime soon.

Speaking at a policy forum focused on U.S.-Canadian economic relations, Powell said that inflation, while continuing to fall, has not moved fast enough and that the current state of monetary policy should remain intact.

"The latest data show solid growth and continued strength in the labor market, but also a lack of further progress this year in returning to our 2 percent inflation target," the Fed chief said during a panel speech.

Echoing recent statements by central bank officials, Powell indicated that the current level of policy will likely remain in place until inflation approaches the target.

Financial markets have had to revise their expectations for rate cuts this year. In early 2024, fed funds futures market participants expected six or seven cuts this year, starting in March. As the data progressed, expectations shifted to one or two cuts, assuming movements of a quarter percentage point, and not starting until September. In March, FOMC officials indicated they expected three cuts this year. However, in recent days several policymakers have emphasized the data-dependent nature of policy and have not committed to setting a level of reductions.

As a result, the FTSE Mib-after closing Tuesday down 1.7 percent at 33,393.85-marked a contraction of 67.00 points

In Europe, London's FTSE 100 is giving up 8.70 points, Paris' CAC 40 is the only bullish advancing 14.90 points, and Frankfurt's DAX 40 is giving ground just below par.

Among the smaller lists on Tuesday, the Mid-Cap gave up 1.4 percent to 46,296.88, the Small-Cap fell 1.1 percent to 27,747.56, and Italy Growth lost 1.0 percent to 8,006.83.


By Maurizio Carta, Alliance News senior reporter


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