Fed Chairman Jerome Powell has begun his much-anticipated speech in Jackson Hole, Wyoming.
Powell provided lukewarm water on interest rate cuts, highlighting the high level of uncertainty that makes the work of monetary policymakers difficult.
Here are some highlights of Powell's speech at the Jackson Hole Symposium:
“When we won this podium a year ago, the economy was at a turning point. Our policy rates were hovering between 5.5% and 5.5% for over a year. This restrictive policy stance helped us reduce inflation and maintain a sustainable balance between aggregate demand and supply.
However, this year, the economy is facing new challenges. The significant rise in tariffs across trading partners is restructuring the global trading system.
The labour market appears to be in equilibrium overall, but this balance is curious and emerges as a result of a significant slowdown in both labor and demand.
This unusual situation suggests an increased negative risk to the labour market.
Looking at inflation, the latest data shows that 12 months of PCE inflation rose 2.6% in July. Core inflation rose 2.9%.
Labor supply is weakening in line with demand.
The balance of risk is changing. At this point there is the fact that changes in the balance of policy restricted areas, basic outlook, and risk may require adjustments to financial policy stances.
“Taxes pose a risk of inflation revival, and the recession remains a scenario the Fed must avoid. However, the baseline scenario is that they believe the impact of tariffs on inflation will be short-lived.”
Powell's speech appears to suggest a potential interest rate cut, but not committing to a critical interest rate cut.
Kobeissi's letter rated the Fed's cut interest rates by 25 basis points in September, “condemning” the labor market.
Prior to Powell's speech, Bitcoin (BTC) fell below $112,000, reaching its lowest level in 1.5 months. Here are the price actions Bitcoin took during Powell's speech:
The Fed's speech at the annual Central Bankers Conference coincided with growing uncertainty over the economy and interest rate policy. Interest rate cuts were expected in September, but the 25 basis point reduction is now down from 99% to 75%. Released macro data has a negative impact on interest rate reductions, but the chances are 24.4% left to leave an unchanged rate.
*This is not investment advice.
