Powell Press Conference: Key Takeaways

10:02 PM September 22, 2021

The press conference of FED chairman Jerome Powell is heading towards its end.

  • Here are they key takeaways from the opening statement:
  • The Fed's actions are aimed at supporting the economy until the recovery is complete
  • Growth should continue at a strong pace, albeit slightly lower than previously expected
  • Sectors that have been hit by the pandemic have little rebound
  • Conditions in the labor market are improving, employment in August fell in terms of the pace of growth
  • The Fed will react if inflation remains higher than expected
  • Inflation will be elevated, but will decline towards next year
  • Interest rates will not be raised until the labor market reaches full employment as determined by the Fed
  • A gradual tapering process that concludes around the middle of next year is likely to be appropriate

Below we present some key takeaways from the Q&A session:

  • Inflationary conditions are reached, now the Fed wants to meet the goals related to the labor market (but at the same time does not say that the inflation targets have exceeded expectations and prices need to be cooled down)
  • When the progress of both Fed goals is visible, then the decision will be made when to start the taper, does not rule out the next meeting
  • Many Fed members believe that the improvement in the labor market is already significant, Powell believes that the progress is not enough
  • Powell "guesses" that the tapering could start early next year

It seems that the Fed sees a chance to announce a tapering at the next meeting (of course, the September data will be of key importance here).

Comments regarding the tapering cause the dollar to strengthen and the gold to weaken. Source: xStation5

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