Federal Reserve Bank chief Jerome Powell sent a blunt message to markets in a keynote speech on Friday, saying it was time for the central bank to cut interest rates
Addressing the annual Economic Summit in Jackson Hole, Pao said the time has come to adjust policy.
The direction of travel is clear and the timing and pace of rate cuts will depend on the changing outlook and the balance of risks, Pow added.
Before Paul’s event, investors had priced the event at nearly 100 percent odds that the Fed would cut rates next month, with odds of a 0.50 percent cut versus 0.25 percent standing at nearly two to one.
Paul’s speech comes just three weeks after the Fed’s September 17-18 meeting, at which the central bank is expected to announce its first rate cut since 2020.
In his speech, Paul acknowledged the recent easing in the labor market and said the Fed does not seek or welcome further cooling in labor market conditions.
The July jobs report rattled markets this month, revealing that the economy added just 114,000 jobs last month, while the jobless rate rose to 4.3 percent. This week’s rate data, which is the highest since October 2021, also shows that the U.S. economy will expand by 8 million by March.
Powell said the labor market is unlikely to become a source of rising inflationary pressure anytime soon.
Paull said: Four-and-a-half years after the onset of Covid-19, the worst economic disruptions related to the pandemic are coming to an end.
Our deflationary objective is designed to underpin a strong labor market, which is costly to establish but has resulted in considerable progress.