Speech by US Federal Reserve Chairman Powell in Jackson Hole: Highlights

US Federal Reserve Chairman Jerome Powell has hinted at possible interest rate cuts and the need for monetary policy adjustments. boosted the stock market on Friday. Speaking at the Fed's annual Jackson Hole Economic Symposium in Wyoming, Powell hinted that rate cuts could be imminent, but gave no specifics on the timing or magnitude of such cuts.

As expected by major banks and analysts, Powell also addressed inflation, pointing to its significant decline and the slowdown in the labor market.

Below you will find some highlights and insights from his speech:

• Decline in inflation: Inflation has fallen sharply and is now approaching the Fed's 2% target, with prices up 2.5% over the past 12 months. Progress toward the 2% target has resumed, and confidence is growing in a sustainable path back to 2% inflation.
• Labour market: The labor market has cooled significantly. The unemployment rate is at 4.3%, which is higher than in early 2023 but still historically low. The increase in unemployment reflects an increase in labor supply and a slowdown in hiring, not an increase in layoffs. Labor market conditions are less tight than in 2019, when inflation was below 2%.
• Delivery bottlenecks: Supply constraints have normalized, reducing inflationary pressures.
• Policy adjustments: The Fed chairman hinted that it is time to adjust policy. The direction is clear, but Powell noted that the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the allocation of risks.
• Economic outlook: With appropriate policy adjustments, there is optimism that inflation can reach 2% while maintaining a strong labor market. Despite a brief recession, the economy has been growing since mid-2020 and has avoided a slow recovery like that seen after the global financial crisis.