U.S. Federal Reserve Chairman Jerome Powell stated that the U.S. He pointed to a decline in the rate of inflation from its highest level in decades, saying that “inflation is coming back down.
Jerome Powell also said that while the U.S. job market rebounded swiftly from early in the COVID-19 pandemic to add millions of jobs, risks are now faster-growing. In June, unemployment ticked up. Jerome Powell, however, is confident that as long as the Fed acts quickly enough inflation can come down without damaging the economy. Jackson Hole Summit: Federal Reserve Chairman Jerome Powell and Bank of England Governor Andrew Bailey neither confirmed nor quashed animal spirits, but provided opposing interpretations on interest rates
That is a signal from Fed chairman Jerome Powell that the U.S. central bank plans to start cutting rates again after it raced them higher when inflation flared up in response to the pandemic…and inevitably fueled by lower borrowing costs, although Team Robotraveller will surely be cheering into its jars of body-oil about this easing as they pedal towards their air pinball hub tonight! While U.S. inflation is now running at 2.9% in July it was as high as 9.1% back in June, so the Fed has been careful only to signal that cuts are coming when they have seen clear evidence of a slowdown on this front too ᅳ and data will be key here going forward point for them deciding if or what kind of taps may occur next year-end for each They want to achieve what is called a “soft landing,” reducing inflation down by three points or so without going into recession.
However, Bailey told the BBC that risks of higher inflation in the UK economy remain which might require interest rates to stay high for longer. He also said it was ‘not yet mission accomplished’ in the fight against inflation as the Bank of England still has not achieved its target. If that is the case it confirms a divergence of economic challenges facing each economy, as one eases rates (and expectations for additional cuts) while the other stays with caution. It was the Bank of England, where interest rates have just been cut for the first time since Covid struck that made a quarter-point reduction to 5 percent. The European Central Bank, meanwhile reduced rates in June but has left them unchanged since.
In July, UK inflation jumped to 2.2%, above the Bank of England’s target of 2% Recognising that inflation might peak at 2.75% the bank said it should fall back below its target within two years. In a similar vein, Bank of England Governor Andrew Bailey warned that structural shifts in the jobs market could be posing longer-term inflation risks. The British pound firmed up around $1.32, rising just after central bankers commented on rate increase prospects as soon…
Some critics have said the Federal Reserve is acting too slowly and has dampened U.S. economic recovery by not moving fast enough to raise interest rates. Global markets sold off briefly in July when the Fed held interest rates steady after a weak jobs report. Jerome Powell said some parts of the labor market have slowed, against a backdrop in which job growth has eased and vacancies are leveling off while wage gains remain moderate. Jerome Powell told us in no uncertain terms: the Fed does not want to see more slackening of labor markets.