© Reuters
Investing.com – US Federal Reserve Chairman Jerome Powell said during his participation in Jackson Hole that he will stick to monetary policy until inflation is clear and sustained.
Powell added that the US Federal Reserve will prepare cautiously for another rate hike. Pointing out that the survival of US economic growth above the expected and natural level threatens the monetary tightening plan, which the Fed does not want.
Powell stressed that the Fed is fully prepared to raise interest rates again if the economic situation requires, noting that the annual core inflation is at 4.3% and the annual core inflation is at 3.3%. Powell talks about the PCE, the personal consumption expenditures price index, which is the most important indicator for the Fed when talking about inflation.
Jerome Powell commented on the US labor market, saying that if it did not slow down enough, this threatens the Fed’s plan to reduce inflation, and continued: “Reducing inflation needs a quieter labor market.”
Powell believed that inflation reacts well to the slowdown in labor markets, but he stressed that the return of inflation to the targeted 2% levels requires more.
Regarding interest rates, Jerome Powell said that the Fed intends to maintain interest rates at high and strict levels until it is completely assured that inflation is falling sustainably towards the 2% target.
Powell made it clear that the Fed is fully aware of the risks of monetary tightening as well as the risks of stopping tightening before the goal is achieved. Powell pointed out that the current interest rates are tightening, but the Fed has not yet decided what the moderate levels are.
Interest expectations after Powell’s speech
And 60% expect the Fed to raise interest rates by 25 basis points at the November meeting. While only 25% see the Fed’s willingness to raise interest rates in September.
Markets after Powell’s speech
The greenback is now rising after Powell’s hawkish rhetoric by 0.19% to 104.152 against a basket of six foreign currencies.
It fell by 0.56% to $1936.15 an ounce, while spot contracts fell to $1908.95, down by 0.40%.
Futures fell 0.66% to $24,073.
The US market indices are now rising by a weak rate, as it rose by 0.16%, by 0.03%, and the S&P 500 by 0.05%.
2023-08-25 14:39:00
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