Late Night Heavyweight! Powell Hints at Fed Rate Cut, US Stocks Rise Together🔥
On August 22 local time, Federal Reserve Chairman Powell stated at the Jackson Hole Global Central Banking Conference that the current situation suggests downward risks to employment growth, and changes in the risk balance may require a policy adjustment. Powell stated that the Fed is open to the possibility of a rate cut.
Powell pointed out that the US economy still shows resilience against the backdrop of high tariffs and tightened immigration policies, but the labor market and economic growth have shown significant slowing. He indicated that although inflation remains a concern, rising risks in the job market may lead the Fed to cut rates in September. He emphasized that under the current tightening policy, changes in economic prospects and risks may necessitate an adjustment in policy stance.
Regarding inflation, Powell noted that tariffs have pushed up prices for some goods, with the July core PCE price index rising 2.9% year-on-year. He stressed that the tariff effects could be a one-time shock, but if inflation expectations are elevated, the risks cannot be ignored.
On policy stance, Powell stated that the Fed's interest rate level is now closer to "neutral" compared to last year, and will cautiously evaluate risks going forward to ensure that a one-time price increase does not evolve into a long-term inflation problem. He reiterated that the Fed will always strive to balance its dual mandate of achieving maximum employment and price stability.
On that day, the Fed also released a revised "Statement on Longer-Run Goals and Monetary Policy Strategy." Key revisions include the elimination of the "average inflation targeting" framework and a return to flexible inflation targeting.
All three major US stock indices rose, and international gold prices increased.
Following Powell's speech, investor expectations for a Fed rate cut in September surged. The latest data from CME's "FedWatch" indicates that the probability of a 25 basis point rate cut in September rose from 75.5% to nearly 90%.
With Powell's speech, all three major US stock indices rose. As of 22:40 Beijing time, the Dow Jones rose by 1.82%, the Nasdaq by 1.83%, and the S&P 500 index by 1.52%; the Nasdaq Golden Dragon Index continued to rally, rising over 2.5% as of 22:40 Beijing time.
International gold prices increased, with spot gold breaking through $3,370 per ounce during trading.
