Ad News Live
August 23 2024
Powell: US Federal Reserve Chairman Jerome Powell stated on Friday that it's time for monetary policy adjustments, with the timing and speed of rate cuts hinging on evolving inflation and unemployment data. Powell also noted that while inflation risks have lessened, concerns about employment have grown.
"The labor market has deteriorated significantly. Unemployment is at 4.3 percent, still low by historical standards but about 4 percent higher than its level in early 2023," Jerome Powell said, speaking at the Jackson Hole Symposium.
Job vacancies have declined. Nominal wage gains have moderated, he said.
"The job market today is less challenging compared to 2019, before the pandemic hit, a time when inflation was under 2 percent. It is unlikely that the labor market will become a source of high inflation pressures in the near future. We neither expect nor welcome a further deterioration in labor market conditions," he said.
Powell said that overall, the US economy is growing at a solid pace, but inflation and labour market data show an evolving situation.
"Upside risks to inflation have diminished, and downside risks to employment have increased. As we highlighted in our previous FOMC statement, we remain attentive to risks on both sides," the US Fed Chair said.
"The time has come to adjust policy. Powell mentioned that while the direction is clear, how quickly and when we cut rates will depend on new data. He hinted at a rate cut cycle that could begin with a hike of up to 50 basis points (bps) in September 2024, also depending on emerging macroeconomic data.
While the US Fed Chair was speaking, the Nasdaq rose 1.41 per cent and the Dow Jones Industrial Average rose 0.78 per cent.
The US central bank has kept interest rates steady since July 2023. Before that, between March 2022 and July 2023, the Federal Reserve raised rates by 525 basis points to combat inflation, which surged due to the Ukraine-Russia war and COVID restrictions.Just so you know, a basis point is one-hundredth of a percent.The last time the Fed cut rates was on March 15, 2020. The FOMC is set to meet once more on September 17-18.
Follow Us
AD News Live
0 Comments