The speech by Jerome Powell, president of the Federal Reserve at the Jackson Hole Seminar, touched the labor market, inflation on inflation and economic conditions. (Credit: Census City Fed)
Federal reserve chair Zerome poly It was stated on Friday that the “balance of risks seems shifting” in the US economy, as the central bank policy makers weigh the status of the labor market status and inflation in front of their next interest rate decision in mid -September.
Powell spoke at the annual monetary policy conference organized by the Canasus City Fed in Jackson Hole, Vyoming, which is expected to be his final address in the event as a Fed Chair. The event comes after a series of inflation prints, including consumer prices shown up and away from 2% targets of the fed, as well as a weakened-appointed job reports of July including a large down amendments for employment in May and June.
federal Reserve The Chairman said that negative risk for the labor market appears to be increasing, while the slower has slowed down economic growth in the first half of the year due to the slow pace, and said that Tariff has started to push the consumer prices more-extinguishing the risk of high inflation, although long-term inflation still works well.
“While the labor market seems to be in balance, it is a curious type of balance, resulting in a marked slow in both the supply and demand of the workers,” Powell said. “This unusual situation suggests that negative risk for employment is increasing, and if they are physical, they can do so quickly as high pruning and rising unemployment.”
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Federal Reserve Chairman Jerome Powell said that in his Jackson Hole speech, “the balance of risks seems shifting”. (Chip Somodeville / Getty Image / Getty Image)
, Tariff effect Consumers are now clearly visible on prices. We expect the effects that accumulate in the coming months, with high uncertainty about both times and zodiac signs. Pavel said that the question for monetary policy is whether these prices are expected to increase the risk of inflation.
“A proper base case is that the effect will be relatively short -lived, one -time innings in the price level. Certainly, one time does not mean simultaneously. It will continue to take time to work in its own way through supply chains and distribution networks at once. In addition, the tariff continues to develop the rates, probably prolonging the adjustment process,” said he said.
“This is also possible, however, the tariffs may be more permanent in front of the top pressure at prices. Inflation dynamicAnd it is a risk to evaluate and manage. ,
Powell said that the risk of wage-wage spiral operated by workers, which operates to request to offset the impact of high prices on the domestic budget and receive high wages, in view of being soft Labor market conditions. He said that in the long term, the expectations of inflation “well anchor and our long -lasting inflation objectives are for the purpose of 2%.”
“Of course, we cannot allow stability of expectations of inflation.
“So keep the pieces together, what are the implications for monetary policy? In the near period, the risk of inflation is reverse and the risk for employment – for a challenging situation. When our goals are under stress in this way, our structure asks us to balance both sides of our double mandate,” he said.
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Powell said that after the Federal Open Market Committee (FOMC) reduced the benchmark Federal Funds Rate from 100 basis points last year, the fed is in place to maneuver in the fed as it brings back rates at a neutral level with the labor market to show signs of durability based on some metrics.
“Our policy rate is now 100 basis points, which is close to neutral than a year ago, and stability of Unemployment rate And other labor market measures allow us to move carefully because we consider a change in our policy stance, “they explained.” Nevertheless, with policy in the restrictive field, the transfer of fundamental approaches and risks may warrant to adjust our policy stance. ,
“Monetary policy is not on a predetermined syllabus. FOMC members will only do these decisions based on their assessment and economic approach and balance of risks. We will never distract from that perspective,” Powell said.
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Fed Chair Jerome Powell spoke to Bank of Canada Governor Tiff McClaim and Bank of England Governor Andrew Bailey during the 2024 Jackson Hole Summit. (Through Natalie Behring / Bloomberg Getty Image / Getty Image)
The stock market held a rally in response to Powell’s speech, with more than 1% major sequence as expectations to cut the September interest rate.
Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, said, “Labor-Market’s weakness reduces the risk of inflation for the fed, and the initial response to the market speaks for itself.” “Long -term, the debate about how far Fed has cut and rapidly cut the rates. Chairman Powell confirmed the target of 2% inflation, and is still doing his work through the economy with tariffs, Fed refrained from announcing the victory over that part of his mandate.”
Seema Shah, the chief global strategist at the Principal Asset Management, said that Pavel’s speech “clearly bent, his comment indicates that the 25-base-point cut is valid, but does not have a 50-base cut.”
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“Certainly, while the case has become stronger for ease, a 50 base point of an emergency-shaped is very low economic justification. The fed should choose the option for such a step, markets can interpret it as a sign of political impact rather than making data-managed decisions. Can reduce circumstances. “
Futures markets showed one obstacles 25-Aadhaar-Bindu Cut According to the CME Fedwatch Tool, Powell’s speech, after Powell’s speech, was trending higher after Powell’s speech. The possibilities of rates on the existing border of 4.25% to 4.5% declined from 25% to 10.8% yesterday after speech, while the 50-base-point cut possibility remained at zero.
