Fed Chair Jerome Powell is about to take the stage at Jackson Hole's annualn central bank symposium. Below, we will report the most important insights delivered Fed Chair regarding monetary policy and economic outlook driving the market volatility.
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Create account Try a demo Download mobile app Download mobile appKey statements from Jerome Powell:
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Downside risk to the labour market are rising, as seen in the most recent Payrolls data. Unemployment stays at a historically low level of 4.2%. The labour demand, however, has lowered, which could lead to a quick materialisation of the risk of labour market slack.
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The reasonable base case is that inflation effects of tariffs will be short-lived. Housing services inflation is in the downtrend, with overall services inflation hovering slightly above what's been historically considered in line with 2-percent target. The inflationary expectations remain well-anchored. Nevertheless, the effects of tariffs on consumer prices are now clearly visible and are expected to accumulate over time.
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The risks to inflation are tilted upside, while risks to labour market to the downside. The rebalancing of risks allows Fed to reconsider its current stance and may warrant an adjustment in the policy.
In conclusion, Powell's speech turned way more dovish than previous inflationary developments, FOMC minutes and post-decision remarks on stable unemployment being the key variable to watch could presume. EURUSD hiked nearly 1%, as Powell's stance opens the door for monetary easing as early as September, despite deep divides in Fed and a handful of governors worried about inflation.
Source: xStation5
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