The Fed Chairman gave a speech after the surprise decision to lower the rate by 50bp instead of 25. What signals did he give to the market about the economy?
The president of the United States Federal Reserve, Jerome Powell, Powell said Wednesday that he sees no signs of a recession or even an economic slowdown ahead. “I don’t see anything in the economy right now that suggests the likelihood of a recession — sorry, a slowdown — is high,” Powell said at a news conference after the aggressive rate cut.
“We see growth at a solid pace, we see inflation falling and we see a labor market that is still at very strong levels, so I don’t really see that.”
Powell’s words to the market
The president of the United States Federal Reserve (Fed), Jerome Powell, said that the cut in interest rates of 50 basis points agreed this Wednesday responds to the need to “recalibrate” monetary policy in the face of progress in inflation and employment.
“We know that the time has come to recalibrate our policy toward something more appropriate given the progress on inflation and employment. The balance of risks is now in balance. And this is the beginning of that process,” Powell said at a press conference.
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Unemployment alert in the US
In this regard, the Fed leader acknowledged that the upside risks to inflation “have actually subsided,” while threats of a labour market slowdown “have increased”.
Powell said that the “patience” of the organization and its “ceasefire” policy allowed the Fed to be in a “very good position” to address these risks to the dual mandate of price stability and maximum employment. For this reason, given the conviction that inflation will return to 2% “over time” and that a further slowdown in employment is not considered “necessary” to ensure this goal, it was decided to reduce the price of money for the first time since March 2020with the first steps of the Covid-19 pandemic.
“We certainly appear to be very close to the point, if not already there, where further declines in job openings will translate more clearly into unemployment,” Powell said.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
