Those hoping for a more accommodating tone from the Jerome Powell were disappointed. As part of his speech at the Jackson Hole symposium, the President of the Fed remained firm in the institution’s desire to fight against inflation, towards a target maintained at 2%. Some thought that this level could be increased, which would have led to a less restrictive monetary policy from the central bank. It will remain so, and for a while… History indeed shows that a premature easing of monetary policy is detrimental, in particular indicated Jerome Powell.
In New York, the major indices lost 1% to 1.4%. In Paris, the Cac 40 fell 1.7% to 6,278.68 points. But in Europe, the decline began a few tens of minutes before the start of the intervention of the Chairman of the Federal Reserve. According to sources relayed by the Reuters agency, the members of the European Central Bank would indeed discuss a possible increase of 75 basis points in key rates for the meeting of September 8. The scenarios leaned more towards increases of 25 to 50 basis points. Isabel Schnabel’s speech, at the beginning of the evening, in Jackson Hole, will only be more followed. She replaces Christine Lagarde, who did not make the trip to Wyoming.
” Restoring price stability will take time and requires vigorous use of our tools to better balance supply and demandreaffirmed Jerome Powell. But our responsibility to ensure price stability is unconditional. »
“At some point” only
” Although the latest economic data is mixed, in my view, our economy continues to show strong underlying momentum. The labor market is particularly strong, but it is clearly unbalanced, with the demand for labor far exceeding the available supply. The rise in prices is well over 2% and high inflation has continued to spread through the economy. So the figures for the month of July [ont été plus favorables]the single-month improvement is well below what the committee will need to consider before we are confident that inflation is easing “, explained the boss of the Fed.
As for the decision of the month of September, it “ will depend on the totality of incoming data and the evolution of the outlook (…) At some point, as the monetary policy stance tightens further, it will likely become appropriate to slow the pace of rate hikes “, he confirmed.