Powell Finally Turns Dove
Federal Reserve Chairman Powell stated at yesterday's Jackson Hole meeting that the risks of the labor market performing worse than expected are rising, and the economic outlook is shifting towards supporting a restart of interest rate cuts.
Powell also mentioned that the impact of the government's trade war on consumer prices is "clearly visible," but this impact is unlikely to be sustained and may instead just be a one-time shock.
This indicates that Powell has aligned with the "dovish" camp and has signaled that he may support a 25 basis point rate cut at the Fed's next meeting in September.
However, Powell still emphasized concerns about inflation, easing market expectations for consecutive aggressive rate cuts by the Fed.
