In mid-August, at the Jackson Hole Economic Symposium hosted by the Federal Reserve Bank of Kansas City, Fed Chairman Jerome Powell said that “the time has come for policy to adjust.” His speech laid the groundwork for (at least) a 25 basis point (bp) rate cut at the next Federal Reserve’s Open Market Committee (FOMC ) meeting on September 17-18. It also marked a clear shift in the Fed’s thought process moving forward, as he stated “confidence has grown that inflation is on a sustainable path back to 2%,” and “we (the Fed) do not seek, or welcome, further cooling in labor market conditions.” This is important to note because the Fed has a dual mandate: stable prices and full employment. Up until now it had been willing to endure some “pain” in the labor market at the cost of taming inflation.
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