INSUBCONTINENT EXCLUSIVE:
6 min read Last Updated Aug 23 2024 | 11:20 PM IST
By Amara Omeokwe and Jonnelle Marte
Chair Jerome Powell said the time has come for
the Federal Reserve to cut its key policy rate, affirming expectations that officials will begin lowering borrowing costs next month and
inflation target.
Treasury yields fell and the S-P 500 index of US stocks rose while the dollar declined.
Swaps traders held roughly
steady in their pricing, with the total rate cuts they foresee through the end of 2024 at about 102 basis points
Odds also remained steady for a quarter-point cut in September, and the probability of a 50-point cut rising slightly to 24%.
While the
remarks provided some clarity for financial markets in the near term, they offered few clues as to how the Fed might proceed after its
September gathering.
Still, the speech confirmed the Fed is on the cusp of a key turning point in its two-year battle against inflation
For most of that time, the labor market proved surprisingly sturdy, giving officials room to focus doggedly on lowering inflation toward the
the sharp increases in unemployment that characterized earlier disinflationary episodes when inflation expectations were less well
A separate measure of underlying consumer inflation cooled in July for a fourth straight month
Meanwhile, the unemployment rate ticked up last month, also for a fourth straight time, reaching 4.3%, and employers pulled back on the pace
mortgages, autos, credit cards and other borrowing
Investors are widely anticipating a quarter-point cut when when the Federal Open Market Committee next meets Sept
negative jobs report would compel the Fed to cut rates by a larger-than-usual 50 basis points in September
Another key matter is how policymakers might proceed with the pace and size of rate cuts in subsequent months.
Powell said policymakers
Louis Fed president, told Bloomberg TV on Friday
