Fed Signals Interest Rate Cuts Ahead

a { color: #880000 !important; background: #ffeeee !important; } Fed Signals Interest Rate Cuts AheadBusiness > EconomyFederal Reserve Chair Jerome Powell announced a likely interest rate cut in September, citing improved inflation rates and a cooling job market. His remarks at the Jackson Hole conference indicate a shift in policy focus, aiming to support employment while managing inflation, which has dropped to 2.9% in July.

What's happened

Federal Reserve Chair Jerome Powell announced a likely interest rate cut in September, citing improved inflation rates and a cooling job market. His remarks at the Jackson Hole conference indicate a shift in policy focus, aiming to support employment while managing inflation, which has dropped to 2.9% in July.

Why it matters

What the papers say

According to Al Jazeera, Powell stated, "The time has come for policy to adjust," emphasizing the need for rate cuts to support the labor market. The Guardian echoed this sentiment, noting Powell's confidence in achieving a soft landing for the economy. Meanwhile, the South China Morning Post highlighted that Powell's remarks led to a rise in U.S. stocks, indicating positive market sentiment. The New York Times pointed out that the Fed's focus is now on balancing inflation control with employment stability, a shift from previous strategies that prioritized cooling the job market. Overall, the consensus among sources is that the Fed is preparing to cut rates in response to improved inflation data and a cooling labor market.

How we got here

The Federal Reserve has maintained high interest rates since 2022 to combat inflation, which peaked at 9.1%. Recent data shows inflation has decreased significantly, prompting discussions about potential rate cuts to support the labor market as unemployment rises to 4.3%.

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