Fed Chair Jerome Powell signals the first interest rate cut since 2020, with investors fully expecting the move in the upcoming September meeting.
Federal Reserve Chair Jerome Powell stated in a speech on Friday stating “The time has come” for the bank to start their journey in interest rates being lowered. Powell stated that with incoming data and a balance of risk the “direction of travel is clear”.
This will be the first rate cut since 2020, coming ahead of the upcoming speech that Powell will make in the Fed meeting in the middle of September (17th-18th). Investors had already priced in the cut, with a 100% prediction in lowering rates in the upcoming meeting. “Four and a half years after Covid-19s arrival, the worst of the pandemic-related economic distortions are fading,” Powell stated.
Further Powell added that “Inflation has declined significantly… Our objective has been to restore price stability while maintaining a strong labor market, avoiding the sharp increases in unemployment that characterized earlier disinflationary episodes when inflation expectations were less well anchored. While the task is not complete, we have made a good deal of progress towards that outcome.” Investors will be closely monitoring the moves in the market as we approach the next Fed meeting in September.
