During the Jackson Hole symposium, three regional Federal Reserve bank presidents expressed their support for Federal Reserve Chairman Powell, believing that inflation is moving towards the 2% target, and the economic environment does not require tightening.
According to the China Fortune Financial and Economic APP, on Friday, during the Jackson Hole symposium, three regional Federal Reserve bank presidents expressed their support for Federal Reserve Chairman Powell, believing that inflation is moving towards the 2% target, and the economic environment does not require tightening. Powell emphasized in today's speech that the time for policy adjustments has come, signaling an upcoming rate cut to the market.
Chicago Fed President Evans stated that given inflation is moving towards the 2% target, it is time to focus more on the employment aspect of the dual mandate of the central bank. He said: "As Chairman Powell stated, we want to remain vigilant on the labor market; we are not only fighting against inflation now, the inflation rate is moving towards 2%." Evans refused to disclose whether he supports a rate cut at the September meeting, but he reiterated that without the economy overheating, there is no need to tighten policy. He mentioned that almost all labor market indicators are cooling down, and there is uncertainty whether this is progressing towards a more normal level or a softer one.
Philadelphia Fed President Harker expects that when the Fed starts easing monetary policy, a 25 basis point rate cut will be the starting point, and if the labor market suddenly deteriorates, he is also willing to accept a larger rate cut. While he is open to the idea of a larger rate cut if there are clear issues in the labor market, he added: "Currently, this is not in our forecast."
Market expectations for larger actions in September rose on Friday morning. According to the CME Group's FedWatch tool, the market now expects a 34.5% chance that the Fed will cut rates by 50 basis points before the end of the September meeting, up from around 24% the previous day.
Atlanta Fed President Bostic noted that it may now be necessary to cut rates more than once by the end of the year. After data showed a slowdown in inflation and the labor market, his views changed. Bostic mentioned in an interview: "Taking an initial rate cut ahead of time may be appropriate." When asked if he supports cutting rates more than once this year, he said: "It is possible." He stated that the extent of the slowdown in inflation exceeded his expectations, "The data indicates that taking action on interest rates is appropriate. For me, I just want to ensure the next few data points are aligned with this. " The market widely expects the Fed to start cutting rates at the September meeting. Bostic had previously stated that he was open to supporting rate cuts.