Fed Chairman provides insights into rate cuts, inflation and the way forward

Inflation and the path forward were the focus of Federal Reserve Chairman Jerome Powell's remarks at the Fed's annual symposium in Jackson Hole, Wyoming last week. Powell reiterated the goal of “restoring price stability while maintaining a strong labor market and avoiding the large increases in unemployment that characterized previous disinflationary periods when inflation expectations were less well anchored. Although the task is not yet complete, we have made great progress toward that goal.”

In his speech to central bankers, politicians, academics and economists, Powell called for an adjustment in policy, saying: “The direction is clear, and the timing and pace of rate cuts will depend on upcoming data, the evolving outlook and the allocation of risks.”

“Chairman Powell made a strong statement that the FOMC wants to prevent further labor market erosion. Some Federal Reserve officials have suggested recently that while a September rate cut is likely, the committee will be cautious about future rate cuts,” said Curt Long, deputy chief economist at America's Credit Unions. “But Powell's comments will reassure markets that the FOMC is aware of the growing risk of recession, that the September rate cut will be the first in a series, and that the committee is prepared to make more drastic cuts if the labor market weakens.”

read more »