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Jerome Powell, the Federal Reserve Chair, was back at the Jackson Hole Symposium today, and he laid out the game plan for what’s coming next with interest rates, and the big news is that rate cuts are on the table. Powell told us that the era of relentless rate hikes is ending. “The direction of travel is clear,” he said. But he also added, “the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”  So, basically, it’s all still up in the air. Powell’s speech is coming just weeks before the Fed’s next meeting on September 17-18, where they might finally announce the first rate cut since the pandemic started.  As we know, the Fed isn’t exactly thrilled about the idea of the job market cooling off any further. That July jobs report didn’t help the mood either. Only 114,000 new jobs were added last month, and unemployment nudged up to 4.3%—the highest since October 2021.  And don’t forget, there’s data showing 818,000 fewer people were employed in the U.S. as of March, suggesting the job market isn’t as strong as some thought.  Now, let’s get into the meat of it. Powell took the opportunity to declare, more or less, victory in the battle against inflation. He’s got some confidence that inflation is heading back to that magic 2% target the Fed has been chasing. “Inflation has declined significantly,” he said. The numbers back him up, too.  Inflation is down to 2.5% using the Fed’s favorite measure, and it’s at 2.9% based on the consumer price index. Powell isn’t popping champagne bottles yet, but he’s definitely more upbeat than he’s been in the past. According to him, the “worst of the pandemic-related economic distortions are fading.” But it wasn’t all good…

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Filed under: News - @ August 23, 2024 7:20 pm