Washington, August 23 (EFE).- US Federal Reserve Chairman Jerome Powell said on Friday that “the time has come to make adjustments to monetary policy” and begin lowering interest rates, although he gave no clues as to how much they will drop next September.
“The direction to follow is clear, and the timing and pace of rate cuts will depend on emerging data, evolving prospects and the balance of risks,” he said at the Jackson Hole economic policy symposium.
The Fed chairman’s speech was the most anticipated part of the 47th edition of the exclusive economic meeting, as he was expected to give clues about the future rate decision that members of the Federal Open Market Committee (FOMC) of the Fed will take at their meeting on September 17 and 18.
Although Powell has been more forceful than on other occasions saying that it is time to lower rates, he did not resolve in his speech one of the great unknowns, how much the initial reduction will be and how many reductions there will be before the end of the year in the three remaining meetings (in September, November and December).
According to experts, the regulator could be conservative in September and lower rates by only 25 basis points or more forceful and start with a 50 basis point reduction.
The tool FedWatch According to the CME Group, 67.5% of analysts expect the fall to be 0.25% and 32.5% to fall by half a point. Since July of last year and after eleven increases, rates have been in the range of 5.25% and 5.5%, their highest level since 2001.
The president of the US central bank said that with the latest economic data received, the Fed’s confidence has increased that “Inflation is on a sustainable path back to 2%,” the regulator’s target figure. According to the latest official data, inflation fell in July for the fourth consecutive month and stood at 2.9 %not so far from the 2 % desired by the Fed.
Powell also spoke of the cooling of the labor market and the consecutive increases in the unemployment rate, which in July stood at 4.3 %.
You may also read: Bronx housing complex owner fined $1 million for discriminating against tenants
Job creation was also notably low last month, with only 114,000 net jobs created, figures that have raised fears of a possible recession in the US economy in recent weeks.
But according to Powell, although the labor market “has cooled considerably from its previous overheated state”the rate “It is still low by historical standards” and “It has not been the result of an increase in layoffs, as usually happens in an economic recession”.
“We will do everything possible to support a strong labor market as we move toward price stability. With appropriate unwinding of policy accommodation, there is good reason to believe that the economy will return to 2% inflation while maintaining a strong labor market,” Powell said.
Held in the exclusive complex Jackson Lake Lodge in it Grand Teton National Parkthe symposium of Jackson Hole It is one of the world’s oldest banking conferences and is regularly attended by international central bankers, Federal Reserve officials, policy makers and academics.
It started on Thursday afternoon with a reception and will last until Saturday with monetary policy as its central theme. In fact, the title of the meeting is “Reassessment of the effectiveness and transmission of monetary policy.”
According to the organizer, the Federal Reserve Bank of Kansas, the 2020s have seen some of the most aggressive monetary policy measures in history and there are many lessons to be learned from the resilience of growth during this period. EFE
