Federal Reserve Chairman Jerome Powell recently addressed the current economic uncertainties, emphasizing a cautious approach to monetary policy. His remarks come amid ongoing global developments and geopolitical risks that are contributing to an unpredictable economic landscape. The analytical report published in the material substantiates the following: the need for vigilance in policy-making to navigate these challenges effectively.
Неопределенность в экономике
Powell acknowledged that the effects of the current situation on the economy remain unclear, stating, 'We don't yet know what the effects of the current situation will be on the economy.' He reassured that inflation expectations are stable, with the Fed committed to its 2% inflation target, despite potential temporary increases due to tariff-induced inflation, which could raise annual inflation by 0.5 to 1 percentage point.
Ограничения монетарной политики
The Fed Chairman also pointed out the limitations of monetary policy in addressing supply-side shocks, indicating that the tools at the Fed's disposal have not significantly mitigated these issues. He noted that geopolitical tensions, particularly in the Middle East, are influencing oil prices, and affirmed that the current policy stance is appropriate while emphasizing the need for ongoing monitoring of these developments.
Независимость ФРС
In addition, Powell reiterated the importance of the Fed's independence in monetary policy, highlighting the institution's responsibilities under the Dodd-Frank Act. He stressed that the Fed should remain free from political influence, maintaining an apolitical stance in its operations. Responding to criticisms regarding the Fed's balance sheet policies, he stated that there is no evidence linking past bond purchases to inflationary effects, citing studies that demonstrate how long-term asset purchases have supported economic activity by lowering interest rates.
Реакция рынка облигаций
Following Powell's comments, the US bond market reacted, with the yield on 10-year Treasury bonds dropping by 10.2 basis points to 4.338%, reflecting investor sentiment in response to the Fed's outlook.
In a recent development, President Trump confirmed the ongoing investigation by the US Department of Justice into Federal Reserve Chair Jerome Powell regarding the costly renovation of the Fed's headquarters. This inquiry contrasts with Powell's recent emphasis on economic stability and the Fed's independence. For more details, see read more.
