Powell’s remarks underscored a shift in the Fed’s approach as labor market concerns have overtaken inflationary pressures as the primary risk to economic stability. He reaffirmed that the Fed is not seeking a further cooling of labor market conditions and is prepared to take decisive action to support economic growth.
Financial markets responded positively to Powell’s speech: the S&P 500 rose more than 1% shortly after his comments were released, while Treasury yields fell. As Powell’s Jackson Hole speech is widely regarded as a key indicator of the direction of the Fed’s monetary policy, his comments provided crucial information about the central bank’s approach in the coming months.
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