Fed Chair Jerome Powell, in his Jackson Hole speech, signaled that the time has come for the Fed to change policy and cut interest rates. The Federal Open Market Committee (FOMC) is currently signaling a shift towards a more dovish monetary policy stance.
“We will do everything we can to support a strong labor market as we make further progress toward price stability,” Powell said at Jackson Hole.
In the last post from us, we highlighted that The “vast majority” of Fed officials expressed support for potentially lowering interest rates at their next meeting in September, if inflation continues to cool down as expected. Several participants even advocated for an immediate rate cut in July, but the consensus was to hold rates steady.
FOMC Minutes: The minutes noted that inflation was moving closer to the Fed’s 2% target and that recent data provided encouraging signs. This progress on inflation is a key factor supporting the potential for a rate cut in the near future.
The FOMC held the federal funds rate unchanged at its most recent meeting but made subtle changes to its statement suggesting it is becoming more confident that inflation is on a trajectory to reach its goals.
Market expectations are now leaning towards a rate cut in September.
- Upcoming jobs data and inflation reports will be key to the September decision.
- The Fed’s primary goal remains to bring inflation down to its 2% target in a sustainable manner.
- Any changes in policy will be data-dependent and gradual.
An Opinion: If implementing rate cut it might boost voters as the economy will raise, that will be beneficial for lady nominees of upcoming US Elections. Its effect will soon be seen in the lower borrowing costs and that will provide relief for the housing market. That also will be Good News for Equity Stock Market because it will boost share prices, with corporate debt costs set to decrease.