The Federal Reserve chairman Jerome Powell is speaking on the economy and policy and says:
Future path of monetary policy driven by data and risk assessments
Data before the U.S. government shutdown suggested growth may be better than expected
Right now there is no ‘risk-free’ path for monetary policy
Data in hand suggest current economy is where it was in September
Downside risks to U.S. job market have risen
Rising risks to job market justified September interest rate cut
Available data show tariffs pushing up price pressures
Recent data point to low-hire, low-fire employment landscape
U.S. central bank has other data beyond government sources to use
May be approaching end of balance sheet contraction ‘in coming months’
Sees signs some parts of money markets seeing tighter conditions
Sees space for Fed to be more ‘nimble’ with balance sheet size
Current Fed policy toolkit working very well
Stripping Fed of interest-paying powers would greatly complicate rate control
Fed losses do not affect monetary policy, profits will return eventually
Fed officials will be discussing composition of balance sheet
Fed still aiming for Treasury-only balance sheet over longer run
Stopping balance sheet expansion sooner would have had small impact
Balance sheet remains an important monetary policy tool
Powell’s message was measured — recognizing cooling labor conditions but signaling patience and flexibility rather than an aggressive easing bias. The chair says that may be approaching the end of balance sheet contraction which is stimulative.
The market is still pricing in a rate cut for October and December.
