USA: Jerome Powell leaves the door open to rate drops

A “rapid” degradation of the American labor market is not to be excluded. Furthermore, could “justify” relaxation of monetary policy, warns the president of the Fed during the meetings of Jackson Hole. Similarly,

The president of the Federal Reserve (Fed) was open on Friday open to a next drop in interest rates. For example, a relaxation claimed at COR and CRI by Donald Trump who does not loosen the pressure on the American central bankers.

The United States is approaching the moment when the Fed will have to lower its interest rates to support employment. Therefore, said Jerome Powell since the annual meetings of Jackson Hole, Wyoming (West).

His speech was eagerly awaited. Moreover, The boss of the monetary institution. Similarly, who approaches the end of his mandate, is constantly flooded by the American president who wants to see interest rates usa: jerome powell leaves door decrease rapidly.

The Head of State also seeks to reshape the committee which sets these rates. Consequently, in order to place people more in line with his vision of the economy.

Donald Trump thus assured on Friday that he was ready to dismiss one of the governors of the Fed. However, Lisa Cook, if she did not resign herself.

First African-American woman appointed to this position, Ms. Cook is accused by a relative of the Republican of having falsified documents to obtain a mortgage.

“What she did is very bad so I will fire her if she does not resign. ” Trump told a press briefing in Washington.

“Changed your mind”

Since Wyoming, Mr. Powell has not kept any political comments. confining himself to the borders of his mandate: to fix interest rates so that inflation remains stable (around 2%) and that full employment is assured.

However. the customs usa: jerome powell leaves door duties set up by the republican billionaire since his return to the White House shake up the American economy.

A “rapid” degradation of the American labor market is not to be excluded. could “justify adjust monetary policy”, noted Jerome Powell.

With this formula. the president of the Fed has clearly shown himself “Dovish” – the way in which central bankers followed in the lower rate, according to Ryan Sweet, of Oxford Economics are in English.

“Jerome Powell says in his own way that he has changed his mind since July. is now leaning in favor of a drop in September,” said Heather Long, economist for the Navy Federal Credit Union bank.

“Delicate situation”

In the meantime, an official report has shown that job creations have melted in recent months. The publication was disparaged by Donald Trump who dismissed the director of the statistical service. arousing the stupor of her usa: jerome powell leaves door opponents and economists from all sides.

The Fed is in a “delicate situation”, according to Mr. Powell. because the new taxes on imported products are starting at the same time to be reflected in the prices paid by consumers, at the risk of reviving inflation.

In theory, the risk of an inflation thrust encourages central bankers to leave their guiding rates unchanged at least. But if they believe that it is necessary to support the activity to avoid layoffs. they tend to lower the rates, which guide the cost of credit for companies and individuals.

The president of the federal reserve never firmly engages on a trend. but one of his missions is to manage the expectations of the markets, indicating in which direction the next decisions of the Central Bank could go.

In this case. his speech convinced the markets that he was in favor of a drop in usa: jerome powell leaves door rate at the next Fed meeting.

Wall Street applauded his words. And the number of investors anticipating the relaxation of rates in September has significantly increased. according to the CME monitoring tool, Fedwatch: they are now an overwhelming majority (around 90%).