• The labour market is “not a source of broad inflationary pressures for the economy now,” says Powell. Reiterates they need to see more good inflation data.
  • “If the labour market weakens unexpectedly, that could be a case for loosening policy as well,” comments Powell
  • Powell reiterates he will avoid sending rate timing signals, and it depends on the data.
  • “The best thing we can do for younger people is to restore price stability,” states Powell
  • Powell: Commercial real estate risk will probably be with us for years. It will be an issue for many banks.
  • When asked when he will lower interest rates, Powell said, “I’m today not going to be sending any signals about the timing of future actions.”
  • “Want to see more good inflation data,” says Powell. 
  • The US economy has performed very well compared to advanced economy peers, says Powell.
  • Powell says there are significant housing issues in the country. The pandemic has created new distortions. Tighter policy is having an effect on economic activity in the housing sector. Powell says the best thing we can do for housing is to get inflation to 2%.
  • Powell says: “Labor market conditions have cooled considerably compared to where they were two years ago,” and the labour market appears to be fully back in balance. He adds that this is no longer an overheated economy.
  • Powell states that easing too soon, too much, could harm inflation progress. Easing too little, too late could unduly weaken the economy.
  • Powell said that “in light of the progress made both in lowering inflation and in cooling the labour market over the past two years, elevated inflation is not the only risk we face.” He adds that “reducing policy restraint too late or too little could unduly weaken economic activity and employment.”

Fed Chair Powell’s Testimony Could Provide Rate Cut Clues

Federal Reserve Chair Jerome Powell will deliver his semi-annual testimony on Tuesday, a key event that may shed light on the central bank’s future monetary policy. Investors are eager for insights on interest rates, inflation, and economic growth. Analysts at Macquarie predict Powell’s tone will be dovish, reflecting concerns over the loosening labor market and softening activity indicators. Recent data suggests increased expectations for a rate cut in September, though some anticipate it may occur in December. Powell’s remarks will be closely watched for any indications of the Fed’s next steps.