This is what Jerome Powell, Chairman of the Federal Reserve (the US central bank), said in his recent statements before the Senate Banking Committee. Powell indicated that the US economy is no longer as severe as it was during the period of high unemployment during the Covid-19 pandemic, while stressing that the central bank is aware of the dual challenges it now faces, namely inflation and the labor market. Hence, Powell expressed his unwillingness to send signals about the timing of any future interest rate actions, reflecting his recent efforts to focus on improving economic data.
Jerome Powell also noted that inflation remains above the central bank’s two percent target, but has seen improvement in recent months. He added that “more good data will enhance” the prospects for a rate cut by the central bank, reflecting its readiness to respond to economic developments and new data in the context of market stability and improving economic conditions.
In his remarks, Jerome Powell showed an increase in confidence in reaching the target inflation rate of two percent, which is necessary to ease monetary policy. Powell compared the lack of progress in this direction during the first months of the year with the recent improvement that helped build the bank’s confidence in the continued decline in price pressures. Powell also noted that the Federal Reserve is concerned about the risks to the labor market and economy if interest rates continue to decline at a high rate for a very long period of time. This reflects concern for the balance between supporting the economy, monitoring inflation and potential risks to the labor market in the current economic context.
Jerome Powell noted that after making no progress towards the two percent inflation target in the first months of the year
Powell: We need more good inflation data
US CPI data for June is scheduled to be released on Thursday, and these data will be crucial for assessing inflation developments and for making decisions on future monetary policy.
We need more good inflation data. Federal Reserve Chairman Jerome Powell said during his testimony before the US Congress on Tuesday: “Today we need more good inflation data, that is all we need.” Indeed, we got a good inflation reading and another “very good” one.
He added: “If there is a deterioration in labor market conditions, this will also be one of the factors that support the option of reducing interest rates, but we will move carefully with interest rates.” He continued: “We are closely monitoring labor market conditions, and if we see unexpected weakness, we will respond.” He stressed that the inflation readings in the first quarter of this year were “shocking,” saying: “We do not want to see inflation at 2.00%, but we need more of what we saw in terms of inflation in the second quarter of this year.” He pointed out that labor market conditions have declined strongly and to a large extent in the recent period.
Powell: No one knows whether the US economy will go through a recession. Federal Open Market Committee Chairman Jerome Powell commented on the monetary policy outlook in the wake of the Federal Reserve’s decision to raise the interest rate by 75 basis points to 3-3.25% range following the committee’s meeting on Wednesday, saying: “It is plausible that job openings could decline without a significant increase in unemployment,” Powell said, adding that long-term inflation expectations remained fairly steady and asserting that this would make it easier to “cut inflation.” Jerome Powell noted that part of inflationary pressures were caused by supply shocks and that commodity prices appear to have peaked
Powell will not talk about the timing of the Fed’s next action
Powell talked about restoring price stability while achieving a smooth decline, noting that this task represents a real challenge for monetary policy makers. He added: “No one knows whether we will face a wave of recession, or if a recession occurs, to what extent or how severe it will be.” “It is also possible that the chances of a soft landing will diminish to the point where monetary policy needs to be tighter for a longer period, but not lowering inflation will lead to greater and more violent pain,” Powell continued.
Powell noted that monetary policymakers believe they need to raise the policy stance to the most hawkish level, by which he means “applying meaningful downward pressure to address inflation.”
Powell will not talk about the timing of the Fed’s next action. Federal Reserve Board of Governors Chairman Jerome Powell said during his testimony before the US Congress on Tuesday that “the American labor market is returning, in one way or another, to conditions close to what it was before the pandemic.” He added, during his testimony before the US Congress: “We are achieving a much greater balance between the two types of risks that we face, and this is the balance that we are striking at the present time.” He continued: “The trend that is closest to being achieved on the ground is that we will shift to an accommodative policy at the appropriate moment,” stressing that “the best thing we can do for housing is to reduce inflation.” He stressed that the US economy was “exceptional compared to the rest of the global economies,” but stressed that he would not send any signals as to when the Fed would take new measures.
US Treasury bond yields
Ten-year US Treasury bond yields fell to 4.299%, compared to the last daily close, which recorded 4.301%. Returns rose to their highest level on the previous trading day at 4.301%, compared to the lowest level recorded at 4.298%. “The American labor market is more or less returning to conditions close to what it was before the pandemic,” Federal Reserve Board of Governors Chairman Jerome Powell said during his testimony before the US Congress on Tuesday.
He added, during his testimony before the US Congress: “We are achieving a much greater balance between the two types of risks that we face, and this is the balance that we are striking at the present time.” He continued: “The trend that is closest to being achieved on the ground is that we will shift to an accommodative policy at the appropriate moment,” stressing that “the best thing we can do for housing is to reduce inflation.” He stressed that the US economy was “exceptional compared to the rest of the global economies,” but stressed that he would not send any signals as to when the Fed would take new measures. These statements were generally in favor of lowering interest rates, as they shed light on progress in US inflation data as the labor market approaches conditions commensurate with lowering current rates.
