- Fed Chairman Powell is currently addressing the Jackson Hole meeting.
- Powell suggests that further interest rate hikes may be necessary.
- He does not paint an overly optimistic picture regarding inflation.
The Federal Reserve Chairman is currently speaking at the Jackson Hole meeting, indicating that further interest rate hikes may be necessary. His outlook on inflation is not overly optimistic, which could have a negative impact on the market.
Federal Reserve Chairman’s Statements
Federal Reserve Chairman Powell has previously made statements that triggered significant sell-offs in cryptocurrencies. His past remarks reflected an overly optimistic outlook. His current statements could provide a clearer perspective on the medium and long-term outlook. Investors are hoping to find answers to questions such as when will interest rates decrease and whether the fight against inflation is nearing its end.
Powell’s Remarks
Among the things Powell stated are his readiness to raise interest rates further if necessary, his commitment to maintaining a tight monetary policy until inflation sustainably falls to 2%, and his cautious approach to making interest rate decisions. He also mentioned that good data is just the beginning of establishing confidence in the inflation path and that the labor market’s resilience could push the Fed to do more.
Powell’s Outlook
Regarding his overall outlook, Powell believes that while the resolution of pandemic-related distortions will continue to exert some downward pressure on inflation, restrictive monetary policy will likely play an increasingly important role. He expects that bringing inflation sustainably back to 2% will require a period of below-trend economic growth and some softening in labor market conditions.
Conclusion
In his concluding remarks, Powell reiterated the importance of risk management in uncertain times. He stated that in future meetings, they will carefully evaluate their progress based on the entirety of the data and the evolving outlook and risks. This evaluation will guide their decision on whether to further tighten or maintain the policy rate and wait for more data. He emphasized the necessity of restoring price stability to achieve both sides of their dual mandate, stating that price stability is needed to ensure the continuity of strong labor market conditions that benefit everyone.
The cautious statements do not seem to favor risk markets, including cryptocurrencies.
