(Bloomberg) -- Here are the key takeaways from Federal Reserve Chair Jerome Powell’s prepared speech at the Kansas City Fed’s economic symposium on Friday:
- Powell’s comments cemented expectations for an interest-rate cut at the central bank’s next gathering on Sept. 17-18. “The time has come for policy to adjust,” Powell said
- “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks”
- The Fed chief said the cooling of the labor market is “unmistakable,” adding, “We do not seek or welcome further cooling in labor market conditions”
- Powell also said his confidence has grown that inflation is on a “sustainable path” back to the Fed’s goal of 2%
- “The upside risks to inflation have diminished. And the downside risks to employment have increased,” he said
- Powell expressed optimism about the Fed’s ability to steer the economy back to 2% inflation while maintaining a “strong labor market.” He said the current level of rates gives policymakers “ample room to respond to any risks we may face,” including a further weakening in the job market
- The speech also analyzed the surge and decline of the country’s latest inflationary episode and the Fed’s reaction to it, outlining both the central bank’s mistake of initially believing rising prices to be transitory as well as its forceful response
- Powell ended the speech with a nod to the Fed’s upcoming framework review. He underscored the need to focus on lessons learned and “applying them flexibly to our current challenges”
©2024 Bloomberg L.P.
