📢 Key Points from Fed Chair Powell's Speech:
1. The recent interest rate cut was in response to employment risks and was a step toward a more neutral policy stance.
2. The current path of policy is not predetermined, and there are "risks on both sides" and no option is risk-free.
3. Monetary policy remains "moderately tight" and can be adjusted based on economic developments.
4. Economic growth has slowed, and employment risks have risen.
5. Inflation has risen and remains at relatively high levels.
6. Consumer spending has slowed, and businesses indicate that uncertainty is clouding their outlook.
7. The labor market is "less dynamic" and "softer," with both labor supply and demand declining.
8. PCE inflation for August is likely to be 2.7% (core 2.3%), driven by commodity prices.
9️⃣ Increases in commodity prices reflect the impact of tariffs rather than general price pressures.
🔟 The Fed's baseline estimate is that tariff-induced inflation will be relatively short-lived.
1️⃣1️⃣ Services inflation continues to slow, and long-term inflation expectations are in line with the 2% target.
1️⃣2️⃣ The Fed will ensure that tariff-induced price increases do not become a persistent inflationary problem.
1️⃣3️⃣ Powell also noted that public confidence in institutions is challenged, and that public officials should focus on their "core missions."
Markets will closely monitor how the Fed responds to these balances between inflation and employment.
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