FED NEWS: Jerome Powell's Speech at Jackson Hole: A Neutral Perspective on Interest Rate Cuts

At the Jackson Hole symposium, Jerome Powell adopted a neutral and balanced tone when addressing the future of U.S. monetary policy. The Federal Reserve chairman emphasized that the management of interest rates will always be data-driven, prioritizing labor market stability and inflation control.

Powell indicated that there are signs of a slowdown in the labor market that may justify two upcoming interest rate cuts, but made it clear that such measures will only be implemented if economic conditions truly require them. At the same time, he highlighted that inflation still remains above the 2% target, reinforcing the need for caution in any monetary policy decision.

An important strategic shift mentioned by Powell was the adoption of a flexible inflation target model, replacing the old average target policy. This approach allows the Fed to adjust its actions more dynamically in response to economic variations, maintaining a balance between growth and financial stability.

The market reacted positively to the neutral tone of the speech, reflecting confidence that the Fed is prepared to act prudently. Powell made it clear that any interest rate cuts, if they occur, will be carefully planned and based on solid data, reinforcing the independence and credibility of the monetary authority.

The speech at Jackson Hole reaffirms that the Federal Reserve will continue to closely monitor the economy, maintaining a cautious and adaptive stance, seeking to protect both growth and market stability.

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