Fed Chair Powell Spoke at Jackson Hole Symposium

The theme for this year's Jackson Hole symposium was ‘Structural Shifts in the Global Economy.’ The agenda explored several significant, and potentially long-lasting, developments that have impacted the global economy. While the immediate disruptions of the pandemic seem to be fading, there are most likely some that are long-lasting in the aftermath. These affect for how economies are structured globally. 

Here are some important points that Jerome Powell, Chair of the US Federal Reserve, covered in his speech at the symposium: 

• “Two percent is and will remain our inflation target. We are committed to achieving and sustaining a stance of monetary policy that is sufficiently restrictive to bring inflation down to that level over time.”

The Fed’s inflation target will remain two percent and monetary policy will be sustained in order to bring the inflation to that level over a period.

• “We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

The central bank is prepared to raise interest rates further as a measure to curb the inflation. 

• “The lower monthly readings for core inflation in June and July were welcome, but two months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal.”

The US GDP (Gross Domestic Product) has grown stronger than expected, at an annualised rate of 2.4% in Q2. Regardless of this, it may be too soon to declare victory, even though the data appears to be trending in the Federal Reserve’s favour. 

• “The rebalancing of the labour market has continued over the past year but remains incomplete ... We expect this labour market rebalancing to continue. Evidence that the tightness in the labour market is no longer easing could also call for a (reverse) monetary policy response.”

Powell, in his speech, suggested that the US job market has been continuing to undergo a positive readjustment post the supply chain disruptions caused by the pandemic, which should contribute to reaching the Fed’s 2% inflation target. While the rebalancing of the labour market is still ongoing, policymakers are keeping a close eye on the situation and are prepared to reverse the decision on rates accordingly.  

• “At upcoming meetings, we will assess our progress based on the totality of the data and the evolving outlook and risks. Based on this assessment, we will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.”

He concluded his speech by saying that the progress will be closely monitored, and necessary decisions will be taken in the Fed’s upcoming meetings. 

In the previous Jackson Hole conferences, Federal Reserve Bank’s Chair Powell has discussed topics such as the ever-changing structure of the economy and the challenges of conducting monetary policy under high uncertainty. Inflation rate is one of the major factors in determining the price of precious metals. A previous article from our commentators at the Royal Mint on interest rates can be found here. 

This article may include references to third-party sources. We do not endorse or guarantee the accuracy of information from external sources, and readers should verify all information independently and use external sources at their own discretion. We are not responsible for any content or consequences arising from such third-party sources.