Federal Reserve Chair Jerome Powell gave the all clear for interest rate cuts to begin and sounded dovish notes about U.S. labor conditions in a speech from Jackson Hole, Wyoming, on Friday that looked back over the monetary response to the pandemic.
“The time has come for policy to adjust,” Powell said. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
Powell noted weaker labor conditions, saying the “labor market has cooled considerably from its formerly overheated state,” though he qualified that it is still low by historical standards.
Unemployment rose to 4.3 percent in July, nearly a full percentage point above its low point last year of 3.4 percent.
Markets currently expect the Fed to cut rates by a quarter percentage point at its September meeting, with the CME Fed Watch prediction algorithm putting the odds at 67.5 percent. The algorithm put the odds of a half-point cut at 32.5 percent Friday morning
News Summary:
- ‘The time has come for policy to adjust’: Powell
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