Jerome Powell at Jackson Hole: 'I've Delivered What Investors Were Hoping For: Clarity on Rate Cuts'
Bret Kenwell, US Investment Analyst for eToro
- Federal Reserve Chairman Powell today delivered in his Jackson Hole speech what investors were hoping for: clarity on rate cuts. Powell acknowledged diminishing risks to inflation and rising risks to employment, saying the time has come for the Fed to tighten policy.
- When it comes to timing, it's nearly impossible for the Fed to 'thread the needle'. Either they appear to cut rates too early and risk a reflationary response, or they appear to cut rates too late and risk a labor market collapse. This is the reality of being data-driven.
- Some investors might have hoped for clarity regarding the size of the rate cuts, but that was always going to be a long shot. Ultimately, Chairman Powell delivered what the market craved: certainty regarding the Fed's monetary policy going forward, opening the door to the first rate cut in more than four years.
