Jerome Powell, the head of the Federal Reserve, is behaving like an experienced hunter in the financial forest! He is moving forward cautiously, feeling out the right path in order to decide whether the rates should be lowered or not. Meanwhile, the whole world is watching him with bated breath!
In his long-awaited speech at the annual Federal Reserve gathering in Jackson Hole, Jerome Powell noted that current conditions may justify a reduction in interest rates.
The head of the regulator also drew attention to the “radical changes” in the US tax, trade, and immigration policies. “The balance of risks appears to be shifting between the Fed's twin goals of full employment and stable prices,” Powell added.
At the same time, the Federal Reserve chairman remarked that the US labor market remains in good shape, and the economy is demonstrating resilience. However, the tariffs introduced by US President Donald Trump are creating risks of a new rise in inflation. The Federal Reserve is making efforts to prevent such a scenario.
In addition, Powell emphasized the importance of the Federal Reserve’s independence but did not touch upon the topic of the White House’s demands for lower rates. Nevertheless, the market was stirred. Obscure hints about a potential rate cut were enough to trigger a sharp rise in stocks and a drop in Treasury bond yields. Meanwhile, the Dow Jones index rose by more than 600 points and set a new record.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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