Jackson Hole Conference: Federal Reserve Chairman Jerome Powell signaled the time has come to ease monetary policy, suggesting rate cuts could help achieve the 2% inflation target while maintaining a strong labor market, marking a shift in the Fed’s approach.

Federal Reserve Chairman Jerome Powell indicated during his speech at the Jackson Hole Economic Symposium that the time has come for the Fed to consider cutting interest rates. Powell suggested that with adequate policy easing, there is a strong chance the economy can return to the 2% inflation target while maintaining a strong labor market.

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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