Takeaways from Fed Chair Powell's speech at Jackson Hole

abcnews.go.com:

Federal Reserve Chair Jerome Powell all but proclaimed mission accomplished in the fight against inflation and signaled that interest rate cuts are coming in a much-anticipated speech in Jackson Hole, Wyoming

WASHINGTON — Federal Reserve Chair Jerome Powell all but proclaimed victory in the fight against inflation and signaled that interest rate cuts are coming in a much-anticipated speech Friday in Jackson Hole, Wyoming.

Under Powell, the Fed raised its benchmark rate to the highest level in 23 years to subdue inflation that two years ago was running at the hottest pace in more than four decades. Inflation has come down steadily, and investors now expect the Fed to start cutting rates at its next meeting in September — an expectation that essentially got Powell's endorsement Friday.

“My confidence has grown that inflation is on a sustainable path back to 2%,” Powell said in his keynote speech at the Fed’s annual economic conference in Jackson Hole.

He noted that inflation, according to the Fed's preferred gauge, had fallen to 2.5% last from a peak of 7.1% two years ago. Measured by the better known consumer price index, inflation has dropped from a peak 9.1% in mid-2022 to 2.9% last month. Both are edging closer to the Fed's 2% target.

Powell sounded confident that the Fed would achieve a so-called soft landing — containing inflation without causing a recession. «There is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market,'' he said.

Higher rates contributed to progress against inflation, as did the easing of supply chain bottlenecks and worker shortages that caused shipping delays and higher prices as the economy bounded back with unexpected strength from