The time has come to cut interest rates, Federal Reserve Chairman Jerome Powell said in his highly anticipated speech at the Jackson Hole Symposium on Friday. The remarks signal a clear shift toward a more accommodative monetary policy in the near future. “The direction is clear,” Powell said. “The timing and pace of rate cuts will depend on upcoming economic data, the outlook, and the balance of risks.”
Powell’s remarks sent Wall Street’s three major indexes sharply higher, with U.S. markets posting big gains around 10:00 a.m. (14:00 GMT). Markets are trying to understand the impact of these remarks on upcoming monetary policy, as investors expect the shift in interest rates to boost economic activity in the coming period.
Powell’s remarks boost confidence in rate cuts and support for the labor market: Federal Reserve Chairman Jerome Powell said at the Kansas City Federal Reserve’s economic symposium that he is increasingly confident that inflation is on the right track toward returning to the bank’s 2% target. This came after inflation reached its highest level in 41 years in June 2022, recording 9.1%, while it declined to 2.9% last July.
Since March 2022, the Federal Open Market Committee has raised interest rates from 0.25% to a range between 5.25% and 5.50%, the highest level in 23 years. Powell indicated that the bank will continue to do everything possible to support the strength of the labor market while continuing to move towards price stability. Powell added: “The labor market seems unlikely to be a source of high inflationary pressures in the near term. We do not welcome or seek further tightening in the labor market.”
Global financial markets were shocked earlier this month when US data showed a significant slowdown in job creation during July,.
Jerome Powell: ‘It’s time’ to cut rates, boost inflation fight
Federal Reserve Chairman Jerome Powell said on Friday that it’s “time” to start cutting interest rates. The remarks came during his speech at the annual meeting of central bank governors in Jackson Hole, Wyoming, where Powell expressed his “increasing confidence” that efforts to combat inflation are on the right track. “It’s time to adjust policy,” Powell said. “The direction is clear. The timing and pace of rate cuts will depend on incoming data, evolving expectations, and the balance of risks.” Powell’s remarks come as financial markets are awaiting further changes in monetary policy as the central bank continues to assess economic conditions and determine the next steps to support price stability and stimulate economic growth.
Federal Reserve Chairman Jerome Powell said on Friday that it’s “time” to start cutting interest rates. Powell noted that he has “greater confidence” that efforts to combat inflation are on the right track. “It’s time to adjust policy,” Powell said during his speech at the annual meeting of central bank governors in Jackson Hole, Wyoming. “The direction is clear. The timing and pace of rate cuts will depend on incoming data, evolving expectations, and the balance of risks,” he added.
Powell’s comments come as financial markets are anticipating changes in monetary policy, with investors expecting the adjustment to have significant impact on the economy and financial markets. Following Powell’s comments, Wall Street’s three major indexes rose sharply and the Fed’s interest rate is currently at a 23-year high of 5.25% to 5.50%, slowing demand in the world’s largest economy ahead of the November presidential election, where inflation and the cost of living have played a pivotal role.
“The time has come to adjust policy. The direction of the path is clear, and the timing and pace of rate cuts will depend on incoming data.
Worst price rise in 4 decades
Powell insisted that inflation, after the worst price rise in four decades that has inflicted pain on millions of families, appears largely under control. “I have grown more confident that inflation is on a sustainable path back to 2 percent,” he said. By the Fed’s preferred measure, inflation fell to 2.5 percent last month, well below its peak of 7.1 percent two years ago and just above the central bank’s 2 percent target. The Fed chairman also said that interest rate cuts should keep the economy growing and support hiring, which slowed last month. “We will do everything we can to support a strong labor market while making further progress toward price stability,” Powell said. By cutting rates, he said, “there is good reason to believe that the economy will return to 2 percent inflation while maintaining a strong labor market.” In what amounts to victory language, Powell noted that the Fed had managed to overcome high inflation without triggering a recession or a sharp rise in unemployment, which many economists have long predicted. The Federal Reserve Chairman attributed this result to the disintegration of the disruptions caused by the pandemic in supply chains and labor markets, which allowed wage growth to be supplied.
Billionaires’ money plays a major role that may reach the stage of deciding the US presidential election scheduled for next November, by contributing to choosing who will be the master of the White House, especially since these billionaires have great influence and influence the election game in various ways. According to a report he reviewed, the United States of America has never witnessed this amount of money flowing into elections, noting that in recent years, major donors such as Kenneth Griffin, George Soros and Reid Hoffman have contributed to changing the results of the elections.
