Powell came out in a short speech from the Jackson Hole seminar to send a message that the Fed will continue with its aggressive policy until it controls inflation, and will not change its policy.
The Fed has started a tightening cycle since last March, raising rates by 225 points since then until today. The market sees the interest rate between 3.50-3.75%.
According to yesterday's data, the US economy recorded the third negative GDP, to confirm the technical stagnation of the economy.
The Fed continues its policy of raising interest rates, with expectations of a 50- or 75-point hike next month. But the Fed is waiting for another inflation report before making a final decision.
Inflation data was released according to the personal consumption expenditures index, which is favorable to the Fed. Statements were issued by a member of the Federal Reserve during a meeting with CNBC, and he continued: Urgent: Strong data leads the movement of the markets and puts Powell in trouble before his speech
The most important statements:
Without price stability, the economy will not achieve an extended period of strong labor market.
Inflation falls to the weakest link.
- The interest rate depends on the inflation data received.
Tight fiscal policy has been going on for some time.
The rate of interest rate hike in September depends on the data received.
Weaker inflation in July is welcome, but not enough to change our direction.
At some point the Fed will be able to moderate the rate hike.
We will continue to raise interest until we are sure that we have completed our work.
- “Higher interest rates, slower growth, weaker labor market, and market conditions will reduce inflation, but they will also hurt businesses and citizens, these are the costs we will pay to reduce inflation. But failure to restore price stability means more pain.
Powell cited the 1970s and 1980s when the Fed failed to respond to inflation expectations and launched a violent rate hike in 198, sending the economy into a recession.
- Powell said that the Fed will respond forcefully so as not to repeat the tragedy of the past by entering the economy into a long-term recession.
- "We are moving monetary policy to levels that will be tight enough to return inflation to an average target of 2%." "Restoring price stability will likely require maintaining monetary tightening for some time. Caution is now at historic highs, negating a reckless rush to loose monetary policy now."
- Powell's speech was short and firm with regard to continuing to raise interest rates until inflation calms down. And decisiveness with regard to price stability, and closely monitor the incoming indicators.
Markets respond to Powell:
- US indices decline, Nasdaq declines 1.01%.
The dollar index trimmed losses, reaching 108.138, after falling below 108.
- After Powell's speech ended, the dollar index resumed the bearish path, with a loss of 0.80% at levels of 107.537.
The Fed has started a tightening cycle since last March, raising rates by 225 points since then until today. The market sees the interest rate between 3.50-3.75%.
According to yesterday's data, the US economy recorded the third negative GDP, to confirm the technical stagnation of the economy.
The Fed continues its policy of raising interest rates, with expectations of a 50- or 75-point hike next month. But the Fed is waiting for another inflation report before making a final decision.
Inflation data was released according to the personal consumption expenditures index, which is favorable to the Fed. Statements were issued by a member of the Federal Reserve during a meeting with CNBC, and he continued: Urgent: Strong data leads the movement of the markets and puts Powell in trouble before his speech
The most important statements:
Without price stability, the economy will not achieve an extended period of strong labor market.
Inflation falls to the weakest link.
- The interest rate depends on the inflation data received.
Tight fiscal policy has been going on for some time.
The rate of interest rate hike in September depends on the data received.
Weaker inflation in July is welcome, but not enough to change our direction.
At some point the Fed will be able to moderate the rate hike.
We will continue to raise interest until we are sure that we have completed our work.
- “Higher interest rates, slower growth, weaker labor market, and market conditions will reduce inflation, but they will also hurt businesses and citizens, these are the costs we will pay to reduce inflation. But failure to restore price stability means more pain.
Powell cited the 1970s and 1980s when the Fed failed to respond to inflation expectations and launched a violent rate hike in 198, sending the economy into a recession.
- Powell said that the Fed will respond forcefully so as not to repeat the tragedy of the past by entering the economy into a long-term recession.
- "We are moving monetary policy to levels that will be tight enough to return inflation to an average target of 2%." "Restoring price stability will likely require maintaining monetary tightening for some time. Caution is now at historic highs, negating a reckless rush to loose monetary policy now."
- Powell's speech was short and firm with regard to continuing to raise interest rates until inflation calms down. And decisiveness with regard to price stability, and closely monitor the incoming indicators.
Markets respond to Powell:
- US indices decline, Nasdaq declines 1.01%.
The dollar index trimmed losses, reaching 108.138, after falling below 108.
- After Powell's speech ended, the dollar index resumed the bearish path, with a loss of 0.80% at levels of 107.537.
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