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UBS' Chief Economist Paul Donovan highlights that the Federal Reserve is expected to maintain its current monetary policy, with investors closely watching Federal Reserve Chair Jerome Powell’s press conference for insights. The focus will be on Powell’s comments regarding rising oil prices, the ongoing war in Ukraine, and their potential impact on U.S. retail gasoline costs. These factors are critical as they influence inflation expectations and consumer spending, which are key drivers of U.S. economic growth. Markets are particularly sensitive to Powell’s rhetoric, as his statements often shape market sentiment and guide future policy expectations. A dovish tone could signal prolonged low rates, while hawkish remarks might hint at tighter monetary conditions. Traders will scrutinize Powell’s responses for clues about the Fed’s stance on inflation and economic resilience amid global uncertainties. For Gulf and MENA investors, the Fed’s policy trajectory and oil price dynamics are intertwined. A stable Fed policy may support oil prices if global demand remains robust, while geopolitical tensions could add volatility. Investors should monitor Powell’s press conference for signals on inflation control and how the Fed balances economic growth with price stability.
