Fed’s Jerome Powell began speaking at Jackson Hole about the economic outlook

Federal Reserve Chairman Jerome Powell on the US economy, inflation and Interest rate policy Friday at 10 a.m. ET at the Kansas City Fed Symposium in Jackson Hole, Wyo.

Investors are looking for clues on how the central bank can manage a series of difficult trade-offs. Inflation should be reduced From a 40-year rise. It wants to reduce inflation while reducing the risks of sharp downturns and increases unemployment rateThis is the lowest level in 50 years.

Central bank officials have raised their benchmark federal-funds rate by 0.75 percentage points at their last two meetings, most recently in July, to a range between 2.25% and 2.5%. The current pace represents the fastest increase in short-term interest rates since the central bank began using the fed-funds rate as its target in the early 1990s.

At a meeting last month, officials agreed to continue raising fares. But They showed more caution As for the pace of future increases, some officials are very nervous about raising the excess rate.

They will weigh whether to raise rates by half a point or 0.75 point at their next meeting on September 20-21, after reaching a consensus this summer that the economy should reach levels that slow growth to reduce investment and spending. and hiring. As the central bank has said it is guided by data on inflation, growth and employment, Mr.

“At this point, I’ll flip a coin,” Atlanta Fed President Raphael Bostick said in a Wall Street Journal interview published Thursday. Two rate increase options September on the table.

Mr. Powell traditionally used

For example, during his first speech as President in 2018, Mr. Powell used this as a warning against placing too much faith in the unobservable variables that determine how and when policymakers should raise or lower interest rates.

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Last year, Mr. Powell laid out a dashboard of five indicators to explain why officials expect high inflation to mostly go away on its own. Mr. Powell reversed course a few months later.

As the pandemic and the war in Ukraine have created new risks, the recent surge in inflation is not a temporary phenomenon, but rather reflects a shift. A new environment of high price pressures.

Central bankers could raise interest rates higher than they have in recent decades and face the impact of a collapse in global trade and continued shortages of labor, goods and energy. This can lead to weak economic growth, high unemployment and frequent recessions.

“Since the pandemic, we’ve been living in a world where the economy is driven by very different forces,” Mr. Powell said. June Group Discussion In Portugal. “What we don’t know is whether we’re going to go back to how we were before or whether we’re going to go down a little bit.”

European Central Bank President Christine Lagarde gave a more pessimistic assessment during the debate. “I don’t think we’re going to go back to an environment of low inflation,” he said.

Write to Nick Timiraos at [email protected]

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