PT Solid Gold Berjangka | Powell Says Fed ‘Proceeding Carefully,’ Leaves Door Open to Hike
Jerome Powell, the Chair of the Federal Reserve, recently gave a speech to the Economic Club of New York, where he discussed the central bank’s approach to monetary policy and the economic outlook. Here are the key points from his remarks:
- Careful Approach: Powell emphasized that the Federal Reserve is proceeding carefully when it comes to its monetary policy decisions. They are closely monitoring economic data and assessing the balance of risks before making any further policy changes.
- Interest Rates: Powell mentioned that the Fed is prepared to raise interest rates again if they observe further signs of strong and resilient economic growth. This indicates that the central bank is open to further tightening of monetary policy if necessary.
- Tightening Financial Conditions: Powell acknowledged that tightening financial conditions, particularly driven by the rise in longer-term bond yields, can have implications for the path of monetary policy. This suggests that changes in financial markets play a role in the Fed’s decision-making process.
- Market Expectations: Powell’s comments are likely to confirm market expectations that the Federal Open Market Committee (FOMC) will keep interest rates steady during their upcoming meeting at the end of October and beginning of November. This would mark a departure from the previous 19 months of rate hikes designed to combat inflation.
- Economic Data: The speech also referred to recent positive economic data, including better-than-expected retail sales, industrial production gains in September, and robust nonfarm payroll growth over the past three months. These indicators suggest a strong economy.
- Inflation Target: Powell reaffirmed the Fed’s commitment to achieving a monetary policy stance that can bring inflation down to the target rate of 2% over time and keep it there. He emphasized the importance of sustaining this target.
- Inflation Measures: The Chair noted that short-term measures of core inflation can be volatile but mentioned that three- and six-month measures are running below 3%. This suggests that inflation is not currently a major concern.
In summary, Jerome Powell’s speech underscores the Fed’s cautious and data-driven approach to monetary policy. While they are prepared to raise interest rates if necessary, they are closely watching economic developments and financial conditions to make informed decisions. The speech also acknowledges recent positive economic data, indicating a strong economy, and reiterates the importance of achieving and sustaining the Fed’s inflation target.
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