Federal Reserve Chairman Jerome Powell has endorsed interest rate cuts, citing an increase in unemployment and a decrease in inflation risks. Powell, speaking at the annual economic conference in Jackson Hole, Wyoming, stated that the time has come for policy adjustment as the economy continues to evolve. While acknowledging progress towards the 2 percent inflation target, he emphasized the importance of maintaining a strong labor market.
Following Powell’s remarks, traders are betting on a rate cut at the Fed’s September meeting, with the possibility of a half-percentage-point cut also being considered. The Fed’s policy rate has been held at the current range for over a year, despite predictions of recession and falling inflation. Powell’s comments reflect a new chapter for monetary policy, with ongoing rate cuts expected.
Powell’s speech at the Jackson Lake Lodge solidified the Fed’s intention to begin rate cuts in the coming months. While Powell did not provide specific details on future policy decisions, updated economic projections at the next meeting will shed light on the Fed’s evolving approach to monetary policy.
Overall, Powell’s remarks signal a shift in the Fed’s strategy towards maintaining a balance between inflation and employment, with a focus on supporting a strong labor market while working towards price stability. The Fed’s decision to adjust policy in response to changing economic conditions reflects a proactive stance in ensuring the resilience of the economy in the face of uncertainties.
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