Major central banks now aligned as Powell signals Fed cuts ahead
“The time has come for policy to adjust,” Fed Chair Jerome Powell told an annual gathering of global policymakers and economists in Jackson Hole, Wyoming, all but committing the US central bank to lowering rates when officials meet in September.
Getting the Fed’s start date fixed, and having many of the world’s big central banks paddling in the same direction, removes some anxieties for investors. Still, tremendous uncertainty and risks remain. Neither Powell nor his counterparts offered much guidance on how quickly they intend to proceed in lowering rates over the next several months. Meanwhile, against that uncertainty, emerging weakness in labour markets and overall growth are replacing inflation as the chief threat for policymakers.
In addition to Powell, several members of the European Central Bank’s Governing Council were also present for the wonky talk and breathtaking scenery in Grand Teton National Park.
Finland’s Olli Rehn, Latvia’s Martins Kazaks, Croatia’s Boris Vujcic and Portugal’s Mario Centeno all indicated they would support another reduction in interest rates next month – after a landmark cut in June.
Rehn described the disinflation process in the euro area as “on track,” while warning that “the growth outlook in Europe, especially manufacturing, is rather subdued.” He added, that “this enforces the case for a rate cut in September.”
Centeno called a decision to ease again in less than three weeks “easy,” given the data on inflation and growth.
Bailey Open to Cuts
Euro-area policymakers
