US Federal Reserve: It’s Time to Lower Interest Rates – Youm7

The president of the council said US Federal ReserveJerome Powell, in a direct message to the markets in a keynote speech on Friday, said “the time has come” for the central bank to start lowering interest rates.

Speaking at the Federal Reserve Bank of Kansas City’s annual economic conference in Jackson Hole, Powell said: “It’s time for a policy change.”

“The path of travel is clear, and the timing and pace of interest rate cuts will depend on incoming data, evolving expectations, and the balance of risks,” Powell said.

Powell’s speech comes just over three weeks before the Federal Reserve meeting on September 17-18, which is expected to see the central bank announce its first interest rate cut since 2020.

Powell acknowledged the recent weakness in the labor market in his speech and said that the Fed “does not seek or welcome further cooling in labor market conditions.” “

The July jobs report shook markets earlier this month, revealing that just 114,000 jobs were added to the economy last month while the unemployment rate rose to 4.3%, the rate maximum from October 2021.

Data from earlier this week also showed that there were 818,000 fewer people working in the country.

“The labor market is unlikely to be a source of high inflationary pressure anytime soon,” Powell said.

Before Powell’s speech, investors had expected a near 100% chance that the Fed would cut interest rates next month, with the odds of a 0.25% cut compared to 0.50% roughly 2 to 1.

“Four and a half years after the arrival of Covid-19, the worst of the economic trends associated with the pandemic is receding,” said Powell.

“Inflation has fallen significantly… Our aim was to restore price stability while maintaining a strong labor market, and avoiding a sharp rise in unemployment which was pointing out previous periods of tension when inflation was not expected to be as stable although the work is not yet done, we have achieved a lot.” “Great progress has been made towards this outcome.”

“On this podium two years ago, I discussed the possibility that tackling inflation would bring some pain in the form of higher unemployment and slower growth,” Powell said.

“Some have argued that inflation must be controlled by a recession and a prolonged period of high unemployment.

Friday’s speech largely suggests that the mission has already been accomplished.