Economic news

Powell flags cooling labor market as emerging risk as Fed moves closer to cuts

2024.07.09 17:46

Powell flags cooling labor market as emerging risk as Fed moves closer to cuts

Investing.com — Federal Reserve Chairman Jerome Powell on Tuesday didn’t quell expectations for a September cut, but rather appeared to be laying the foundations for cut in the coming months after flagging the recent labor market cooling as an increasingly important cog in the Fed’s rate-decision wheel.  

“Elevated inflation is not the only risk we face,” Powell said Tuesday in testimony before the Senate Banking Committee, noting that the “labor market has cooled really significantly across so many measures.”

For a long while, curbing high inflation was the key, arguably the only risk for the Fed, and its other main policy focus, maximum employment, didn’t get much attention. And for good reason as jobs remained plentiful.  

But with the labor market showing signs of cooling — the Fed has been forced to shift focus and acknowledge the risk is becoming two-sided as keeping policy too high for too long could leave a big dent in employment and the economy.  

“Reducing policy restraint too late or too little could unduly weaken economic activity and employment,” Powell said, after noting that labor market indicators “have returned to about where they stood on the eve of the pandemic”

The Fed’s acknowledgement that risks are more two-sided suggests that the central bank’s outlook on the balance of risks is shifting …  “in ways that would plausibly underpin a cut in September rate cut,” , Evercore ISI said Tuesday. 

While the Fed chief appears to laying the breadcrumbs for a September cut, incoming economic data still holds sway, Evercore ISI adds, ahead of  Thursday’s inflation report that could “sustain and support the Fed’s evolving assessment.”

Others agree and point to the Jackson Hole annual symposium in August as the potential opportunity for the Fed to firm up expectations for a September rate cut. 

“If we are right and the data comes in as we project, we suspect that the Jackson Hole symposium in late August will be used as the venue to give the market the clearest indication on impending policy loosening,” ING said in a Tuesday note.



Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 69,942.74 3.02%
ethereum
Ethereum (ETH) $ 2,445.95 0.60%
tether
Tether (USDT) $ 0.999581 0.01%
bnb
BNB (BNB) $ 567.45 2.60%
solana
Solana (SOL) $ 166.88 4.60%
usd-coin
USDC (USDC) $ 0.999065 0.11%
xrp
XRP (XRP) $ 0.512959 0.73%
dogecoin
Dogecoin (DOGE) $ 0.173694 9.11%
staked-ether
Lido Staked Ether (STETH) $ 2,445.69 0.62%
tron
TRON (TRX) $ 0.161069 1.56%
cardano
Cardano (ADA) $ 0.335357 1.96%
the-open-network
Toncoin (TON) $ 4.71 1.51%
shiba-inu
Shiba Inu (SHIB) $ 0.000018 6.73%
wrapped-steth
Wrapped stETH (WSTETH) $ 2,900.92 1.27%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 69,942.74 3.21%
avalanche-2
Avalanche (AVAX) $ 24.15 5.10%
weth
WETH (WETH) $ 2,446.01 0.63%
chainlink
Chainlink (LINK) $ 10.84 4.77%
bitcoin-cash
Bitcoin Cash (BCH) $ 341.07 2.26%
sui
Sui (SUI) $ 2.00 7.87%
usds
USDS (USDS) $ 1.00 0.03%
leo-token
LEO Token (LEO) $ 6.04 0.03%
polkadot
Polkadot (DOT) $ 3.89 3.07%
litecoin
Litecoin (LTC) $ 66.28 0.16%
near
NEAR Protocol (NEAR) $ 3.82 5.36%
wrapped-eeth
Wrapped eETH (WEETH) $ 2,571.81 0.63%
aptos
Aptos (APT) $ 8.50 4.93%
uniswap
Uniswap (UNI) $ 7.14 4.48%
pepe
Pepe (PEPE) $ 0.000009 6.01%
internet-computer
Internet Computer (ICP) $ 7.39 4.11%
bittensor
Bittensor (TAO) $ 457.61 9.51%
dai
Dai (DAI) $ 0.999684 0.05%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.24 10.03%
monero
Monero (XMR) $ 158.38 1.21%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.09%
kaspa
Kaspa (KAS) $ 0.11101 5.74%
stellar
Stellar (XLM) $ 0.093349 2.32%
whitebit
WhiteBIT Coin (WBT) $ 19.03 0.39%
ethereum-classic
Ethereum Classic (ETC) $ 18.21 2.18%
first-digital-usd
First Digital USD (FDUSD) $ 0.99757 0.10%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.303725 3.31%
blockstack
Stacks (STX) $ 1.53 4.52%
okb
OKB (OKB) $ 38.02 1.68%
dogwifcoin
dogwifhat (WIF) $ 2.12 5.98%
filecoin
Filecoin (FIL) $ 3.39 1.82%
aave
Aave (AAVE) $ 134.66 4.03%
crypto-com-chain
Cronos (CRO) $ 0.072571 2.64%
arbitrum
Arbitrum (ARB) $ 0.49073 2.77%
mantle
Mantle (MNT) $ 0.563845 1.66%
immutable-x
Immutable (IMX) $ 1.09 1.82%