US Federal Reserve (Fed) President Jerome Powell reassured on Friday that he is more confident in a “sustainable” path of disinflation, and has said he expects a rate cut at the September meeting.
The chairman of the Federal ReserveJerome Powell said Friday that “the time has come to make adjustments in monetary policy” and take action lowering of interest ratesalthough it has given no indication of how much they will fall next September.
It has increased my confidence that the inflation is in one sustainable way back to 2%‘, the US central banker said in his long-awaited speech in Jackson Hole.
In his speech, the Fed president stressed that the US economy continues to grow at a solid pace overall, but that inflation and labor market data show an “evolving” situation, with upside risks to prices “having diminished.” In this sense, Powell believes that, after a pause in early 2024, “progress toward the 2% target has resumed,” so the inflation rate is now much closer to the target.
“The direction to follow is clear, and the timing and pace of rate cuts will depend on the data obtained, the evolution of the outlook and the balance of risks,” he noted in the context of Jackson Hole’s economic policy.
The speech by the President of the Federal Reserve (the US central bank) was the most anticipated of the 47th edition of the exclusive economic meeting, as it was expected to provide clues about the future interest rate decision that the members of the Federal Open Market Committee (FOMC, in English) of the Fed will take part in their meeting on September 17 and 18.
While Powell was more forceful than on other occasions in saying it is time to cut rates, his speech did not resolve one of the big unknowns: how much the initial cut will be and how many more cuts there will be before the end of the year in the three missing meetings (in September, November and December).
Looking ahead to the September meeting, investors remain divided between those betting on a 25 basis point cut, which would lower rates to a range between 5% and 5.25%, a move that has a 67.5% probability, while 32.5% are agreeing on the possibility of a 50 basis point adjustment, which would keep the cash price within a 4.75% to 5% range.
Source: EITB
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
