Traders and investors were waiting for Fed Chairman Jerome Powell’s speech to the Washington, DC Economic Club at noon on Monday.
Here are important excerpts from Powell’s speech:
- The economy has performed quite well in the last few years.
- I’m grateful the former president’s injury wasn’t more serious.
- The labor market has gradually become more balanced.
- The US economy has performed quite well in the last few years.
- The economy was expected to slow this year and inflation would continue to advance; Something similar happens.
- Some further progress was made on inflation in the second quarter.
- The economy was expected to slow this year and inflation would continue to advance; Something like this is happening, saying the labor market is no tighter than it was before the pandemic.
- The second quarter of inflation represents progress, with three good readings.
- While three data from the second quarter increase confidence that inflation has fallen, both authorities say that since inflation has fallen, both powers will be looked at
- If we see an unexpected weakening in the labor market, this will require us to react.
- We will not be sending signals regarding any meetings today.
- The FED’s job is to make decisions based solely on data, not policy.
- If the FED waits for inflation to reach 2% to cut interest rates, it will be waiting too long.
- The test is that officials want to make sure inflation is moving downwards; More good data will boost confidence, and that’s what the Fed has been getting lately.
Stock and financial market bulls are enjoying the fact that the Fed turned dovish on US monetary policy last week and the market expects a cut in US interest rates in the next few months.
The Fed meets July 30-31, but under central bank rules, policymakers cannot comment on monetary policy from Saturday, July 20, until the Friday after the meeting.
Policymakers were not expected to reduce the benchmark interest rate at the next meeting from the 5.25% to 5.5% range where it has been since July 2023. But recent weak inflation reports could lead them to change their policy statements to hint at a possible rate cut at the next meeting in September, and comments this week will be parsed to see how the latest data shapes policymakers’ views.
*This is not investment advice.
