Powell signals rate cut in emphatic Jackson Hole speech
Federal Reserve Chair Jerome Powell delivered a highly anticipated speech at the Jackson Hole symposium, endorsing an imminent start to interest rate cuts. He indicated that further cooling in the job market would be unwelcome and expressed confidence that inflation is within reach of the U.S. central bank's 2% target. Addressing central bankers, Powell emphasized that the risks to inflation have diminished while risks to employment have increased. The Fed raised rates to a two-decade high during the pandemic when inflation soared; however, they have not moved rates in over a year, even as inflation decreased and the economy continued to grow. Powell stated that policymakers are aiming for a "soft landing," in which a recession is avoided, and highlighted the importance of protecting the labor market as rates are cut. He noted that the recent rise in unemployment is due to an increase in labor supply and a slowdown in hiring, rather than layoffs. Following Powell's remarks, markets adjusted to slightly higher odds of a more substantial half-point rate cut in the coming period, though a quarter-point cut is still widely anticipated. This outlook led to rallies in all three of Wall Street’s main indexes.