Fed Reserve chair shares insights on rate cuts, inflation, and path forward

Inflation and the path forward were central to Federal Reserve Chairman Jerome Powell’s remarks at the Fed’s annual symposium in Jackson Hole, Wyoming last week.  Powell reiterated the objective “to restore price stability while maintaining a strong labor market, avoiding the sharp increases in unemployment that characterized earlier disinflationary episodes when inflation expectations were less well anchored. While the task is not complete, we have made a good deal of progress toward that outcome.”

As he addressed the collective group of central bankers, policymakers, academics, and economists, Powell called for policy adjustments stating, “…the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

“Chair Powell delivered a forceful declaration of the FOMC’s intent to avoid further erosion in the labor market. Some recent Federal Reserve officials had suggested that while a September rate cut is likely, the Committee will act with caution in reducing rates down the road,” said America’s Credit Unions Deputy Chief Economist Curt Long. “But Powell’s comments will reassure markets that the FOMC is cognizant of the growing risk of recession, that the September cut will be the first in a series, and that the Committee stands ready to make more drastic cuts if the labor market weakens.”

 

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