Washington CNN-
The central banks of America have unambiguously indicated that lower interest rates are finally on the horizon, which marks a crucial milestone for the historical - and so far a successful - inflation struggle of the Federal Reserve.
"The time has come for politics to adapt," said Fed -chairman Jerome Powell in prepared comments about his keynote speaker at an annual collection of central bankers and economistsI Jackson Hole, Wyoming"We will do everything we can to support a strong labor market as we make further progress in the direction of price stability."
The chef also expressed confidence in the capacity of the US economyDraw such a joint soft landing, an extremely rare result in which inflation is temporary without a strong increase in unemployment.
"With a suitable call in political restraint, there is good reason to believe that the economy will return to 2% inflation while retaining a strong labor market," he said.
The markets responded positivelyFor the comments from Powell, with all three most important indexes that end the day higher on Friday.
"Powell called the clock until the start of the cutting cycle," says Seema Shah, main strategist of the most important strategist at Principal Asset Management, in a note on Friday.
FED's aggressive tariff district campaign, which started at the beginning of 2022, pushed the interest rates into a 23-year-old high in an attempt to fight the highest inflation in decades.The current level for a year now.From mortgage interest to credit cards, everyday consumers and companies are forced by hard loan costs.
But the aggressive action of the central bank seems to be bearing fruit.remains in good conditionAnd that also applies to the broader US economy: economic growth is solid this year, and Atlanta Fed projects that are not eliminated.
The last comments of Powell open the door far open for the first interest rate since 2020, planned for the emerging political meeting of FED on 17-18. September.aricans have already felt some lighting thanks to tumbling bond returns that move in expectation of the interest of the interest of the interestFed on interest.Earlier this month.
"Things will stop," Tom Porcelli told the American economist at PGIM Permanent Income, to CNN. "
Jerome Powell arrives during a dinner in Jackson Lake Lodge during Jackson Hole Economic Symposium in Moran, Wyoming, on August 22.
A big turning point
Fed's emerging decision to lower interest rates is a sign that officials feel "confident" that the price pressure is under control.
FED's preferred infection meter - costs for personal consumption costs -Registered at an annual rate of 2.5% in June,Significantly down from 7.1% just two years ago..
Inflation fell in the second half of last year when the wider US economy remained robust.Outburst of productivity growth, who strengthened growth without keeping inflation.
"Our limiting monetary policy has contributed to moderation of overall demand, in combination with improvements in the total supply to reduce inflation pressure, while growth allows it at a healthy pace," said Powell.
Modered has the historically high level of vacancies with regard to unemployment that is mainly normalized by a decrease in vacancies without significant and disruptive dismissals, so that the labor market brings to a state where it is no longer a source of inflation pressure. "
Job Opening, a power of attorney for the demand from employers to employees, registered at 8.2 million in June,significantly downOf the record high of 12.2 million in March 2022. Wage growth has also cooled considerably in recent years.
Have pad in front of
Fed has even seen considerable progress when taming inflation, but a soft landing is still not guaranteed.Sometimes not out.
FED economists even noticed during last month's policy meeting that "the recent softening in some labor market indicators can indicate a larger than expected delay in the total demand growth" market can lead to American customers delaying their expenses more than expected.
A big question mark is the future of the American labor market, which is an important driving force for the American economy., because the consumer costs make up around 70% of the US economy.
Fed and Wall Street are careful with American consumer health.Home DepotAnd Lowe has noticed that American shoppers areuses more carefulToday they choose cheaper alternatives.Better than expected financiallyFor the last quarter.The American turnover at the largest retailer in America is open for at least a year in the past quarter and business income rose by 8.5% in the quarter, because the online turnover rose 22%.
"There is still a path to a soft landing, but this is limited when the labor market brakes, which is a source of costs," says Elizabeth Tenant, senior economist at Nerdwallet.
