The Chairman of the Federal Reserve of the United States (Fed) Jerome Powell assesses the impact of tariffs on prices as only temporary.

He emphasized that stable unemployment helps the Fed be more cautious in adjusting policies and provides a new analytical framework to respond to various economic conditions.

MAIN CONTENT

  • Tariff-induced prices are short-term and do not cause prolonged inflation.

  • The stability of the unemployment rate supports the Fed in maintaining a cautious policy.

  • Market expectations for the likelihood of an interest rate cut in September have increased significantly.

How does Fed Chairman Jerome Powell assess the impact of tariffs on prices?

Powell confirms that price impacts from tariffs are usually only temporary and are seen as a reasonable baseline scenario for the economy.

This indicates that the Fed does not view increases in prices due to tariffs as a lasting cause of inflation, but rather as a temporary variable that needs to be controlled to avoid long-term negative impacts. Preventing price spikes from becoming a persistent issue helps maintain greater stability in economic policies.

What does Powell say about the unemployment situation and the Fed's policy?

He emphasizes that the current unemployment rate remains stable, allowing the Fed to act cautiously in changing monetary policy.

Stable unemployment helps the Fed avoid pressure to change policies abruptly. Instead, the Fed is applying a new, diverse analytical framework to respond flexibly to various economic fluctuations, while still focusing on minimizing job loss risks.

How have market expectations for the Fed's interest rate policy in September changed?

After Powell's statement, the market raised expectations for a Fed interest rate cut in September from 75% to nearly 90%.

This information reflects confidence that monetary policy will be loosened to support the economy against potential challenges. This adjustment in expectations also shows the rapid impact of Fed leadership's statements on financial market developments.

"The one-time price increase due to tariffs cannot turn into a prolonged inflation issue; we have developed a new analytical framework to accommodate diverse economic conditions."
– Jerome Powell, Chairman of the Federal Reserve of the United States, Announcement on August 22, 2024

Frequently Asked Questions

What is the short-term impact of tariffs on prices?

Tariffs create short-term price increases but do not cause prolonged inflation if managed correctly.

What does stable unemployment mean for monetary policy?

It helps the Fed maintain a cautious policy, avoiding abrupt policy shifts that affect the labor market.

Why do markets expect the Fed to cut interest rates in September?

Powell's statements reflect caution in adjusting interest rates, enhancing the likelihood of easing support for the economy.

What is the purpose of the Fed's new analytical framework?

The new analytical framework helps the Fed respond flexibly to various economic situations, protecting macroeconomic stability.

What are the main risks to the labor market mentioned by Powell?

Powell warns about risks that could negatively affect employment and needs to be closely monitored.

Source: https://tintucbitcoin.com/powell-noi-thi-truong-tang-ky-vong-cat-lai/

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