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Jerome Powell, Chairman of the US Federal Reserve (Fed), delivers the Semi-Annual Monetary Policy Report and responds to questions before the Senate Banking Committee on the first day of his Congressional testimony. Key takeaways “Most recent labor market data sent a pretty clear signal that the labor market has cooled considerably.” “Labor market is more or less back to pre-pandemic levels. “We are well aware we now face two-sided risks.” “Labor market is fully back in balance now.” “If we move too quickly or slowly on rate cuts, there are risks on both sides.” “We are very much balancing those two risks these days.” “Not likely next policy move would be a rate hike.” Fed FAQs Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback. The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis. In extreme situations,…

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Filed under: News - @ July 9, 2024 10:18 pm