**US Federal Reserve Indicates Rate Adjustments Coming**
In a captivating Friday speech at the Jackson Hole Economic Symposium, US Federal Reserve Chair Jerome Powell hinted at forthcoming adjustments to the central bank’s benchmark rate. Powell declared, “The time has come for policy to adjust. 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 noteworthy rise in inflation by 2.5 percent over the past year has strengthened confidence that inflation is steadily progressing towards the Fed’s targeted level of 2 percent. Concurrently, the labor market has experienced a cooling trend, with the unemployment rate now standing at 4.3 percent, nearly a percentage point higher than in early 2023 but still historically stable.
Powell emphasized that the increase in unemployment is not due to layoffs, a common occurrence during economic downturns, but rather a result of a substantial uptick in the labor force supply and a slowdown in hiring. Reflecting on his previous statements made two years ago at Jackson Hole, Powell highlighted concerns about potential economic recession fears due to taming inflation.
The Fed’s persistent commitment to restoring price stability without flinching from its responsibilities has gradually unwound inflationary pressures. The central bank’s judicious monetary policy has curbed excessive demand while improving the supply of goods and services. Additionally, the moderation in labor demand without resorting to layoffs has alleviated employment conditions without adding to inflationary pressures.
Powell’s dovish tone resonated positively with the markets, stimulating a morning trading surge. The S&P 500 (INDEXSP:.INX) gained 0.77 percent to reach 5,612 points by midday, while the Nasdaq-100 (INDEXNASDAQ:NDX) rose by 0.98 percent to touch 19,672 points. The Dow Jones Industrial Average (INDEXDJX:.DJI) also saw a 0.77 percent increase, reaching 41,000 points.
The optimism extended to precious metals, with gold reaching $2,510.33 per ounce and silver standing at $29.73 per ounce.
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*Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.*