Federal Reserve Chair Jerome Powell highlighted a possible interest rate cut in the near future during the annual Jackson Hole meeting. He pointed out rising economic risks and uncertainties in the market.
Economic Situation and Potential Rate Cuts
During the meeting, Powell noted that "the balance of risks appears to be shifting." Despite a strong labor market and positive economic indicators, he warned of increasing threats, such as rising inflation due to tariffs.
Market Reaction to Powell's Statements
Following Powell's remarks about potential rate cuts, the yield on the two-year Treasury note dropped by 0.08 percentage points to 3.71%. This statement led to a positive response on Wall Street.
Fed's Strategy Review and Past Mistakes
Powell also discussed the Fed's five-year strategy review, which was reassessed after inflation surged to four-decade highs. He expressed regret that the Fed previously underestimated inflationary risks, calling it a mistake. "The past five years have been a painful reminder of the hardship that high inflation imposes," Powell noted.
Jerome Powell's comments regarding potential interest rate cuts have captured market attention, underscoring the current economic uncertainty.
