• Remarks from Fed Chair Jerome Powell and his colleagues will hog the limelight on Thursday.
• Fed officials lately explained why they supported an outsized rate cut at the September meeting.
• Powell’s speech and Fed commentary could rock the US Dollar against its major rivals.

With the return of US Federal Reserve (Fed) policymakers to the rostrum late last week, the US Dollar (USD) continues to bear the brunt of the dovish Fed outlook on interest rates.

The US central bank opted last week for a 50 basis points (bps) rate cut, bringing the fed funds rate to a range of 4.75%-5.0%. The Summary of Economic Projections, the so-called Dot Plot chart, suggested an additional 150 bps of rate cuts for this year and the next.

Fed policymakers stick to the dovish stance

Since then, several Fed officials have justified their stance for an outsized rate cut move, barring Fed Governor Michele Bowman, who dissented by favoring a 25 bps reduction following the September policy meeting.

Citing progress on disinflation and loosening labor market conditions, Atlanta Fed President Raphael Bostic and his Minneapolis and Chicago counterparts, Neel Kashkari and Austan Goolsbee respectively, explained on Monday their reasons behind voting for a large rate cut instead of a smaller first cut in four years.

In his remarks prepared for a virtual event organized by the European Economics and Financial Centre on Monday, Bostic said that “in my view, the 50-basis-point adjustment at the meeting last week positions us well should the risks to our mandates turn out to be less balanced than I am thinking,” 

Kashkari said that the 50 bps rate cut was the ‘right decision.’ Meanwhile, Goolsbee came out the most dovish, stating that “many more rate cuts are likely needed over the next year, rates need to come down significantly.”