The moment everyone on Wall Street was waiting for finally came and went this week as the FED’s Jackson Hole meeting came to a close and FED Chairman Jerome Powell went before the public to summarize the topics that were discussed.
Many traders looked towards this meeting and Powell’s post-meeting comments to get a good gauge on what the immediate future of the U.S. economy might look like as FED officials come even closer to a decision on when to fully return U.S. interest rates back to their pre-virus positions and were happily surprised when the markets managed to make their way upwards following Powell’s comments!
Today we look at Powell’s most recent comments and what they mean for, not only the U.S. economy but your investments as well…
All Eyes on Powell
Following the FED’s highly anticipated meeting this week set in Jackson Hole, Wyoming (… though held virtually this year like the 2020 summit due to covid concerns) Powell stepped in front of cameras once again to appease the public’s interest in topics discussed between officials over the passing hours.
During his conference, Powell noted that he feels the U.S. economy is no longer in need of as much policy support as it once did. As such, Powell expects to see some tapering by the end of the year but feels we still have a long way to go before we can begin that process.
Other FED officials believe the tapering process could begin as early as the FED’s meeting set for the end of September.
That being said, Powell also stated that he believes the Central Bank plans to begin withdrawing some of its “easy-money” policies before the year’s end.
“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” Powell said on Friday, adding that inflation currently sits solidly around the FEDs desired 2% target rate but, “we have much ground to cover to reach maximum employment,” which is necessary before an official rate hike can happen.
With this in mind, it’s expected that the FED will likely begin cutting the amount of bonds it buys each month before the end of the year as long as the continued rate of economic progress should continue.
Though some officials have been a bit critical of Powell’s past decisions such as last year’s initiative in which the FED committed to full and inclusive employment even if it meant allowing inflation to run hot for a while, Powell has continued to stand firm, stressing the importance of not reacting with ill-timed policy moves in response to what is expected to be a temporary economic hurdle.
Learn More Here…
If you’re interested in taking advantage of recent jumps in the market following today’s FED update but aren’t sure where to begin, we encourage you to join the latest Ask the Pros roundtable where host Celeste Lindman sits down with this week’s group of panelists to discuss everything you need to know about today’s market and tomorrow’s profits!
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