Federal Reserve Başkanı Powell, para politikasında ayarlama zamanının geldiğini belirtti.

The Chairman of the Federal Reserve (Fed), Jerome Powell, stated that it is time for policy adjustments, saying, "The direction of the movement is clear, the timing and pace of interest rate cuts will depend on incoming data, evolving outlook, and risk balance."

Powell, in his speech at the Jackson Hole Economic Policy Symposium, emphasized that the labor market is no longer overheated and conditions are less tight than before the pandemic.

Powell mentioned that the risk balance has changed and they are paying attention to risks on both sides, stating, "Upside risks to inflation have diminished, while downside risks to employment have increased." Powell explained that they have made significant progress in restoring price stability by avoiding a sharp increase in unemployment, even though their tasks are not yet complete. Powell pointed out that inflation is now close to the 2% target, saying, "I have increased confidence that inflation is on a sustainable path toward the 2% target."

"WE ARE NOT SEEKING FURTHER COOLING IN THE LABOR MARKET"

Powell noted that the labor market has significantly cooled down from its previous overheated state and they are not seeking further cooling in labor market conditions. Powell emphasized that it is time for policy adjustments, saying, "The direction of the movement is clear, the timing and pace of interest rate cuts will depend on incoming data, evolving outlook, and risk balance. We will do everything in our power to support a strong labor market while making further progress toward price stability." Powell stated that the current level of the policy rate provides enough room to respond to any kind of risk, including the risk of further undesirable weakening in labor market conditions.

POWELL'S SPEECH STIRRED THE MARKETS

Prior to Fed Chairman Powell's speech, the yield on the US 10-year Treasury bond, which was at 3.85%, dropped to 3.79% after the signal of policy adjustments. The dollar index fell to 100.92, while the euro/dollar exchange rate rose to 1.118. The euro reached its highest level against the dollar since July 2023, and the pound reached its highest level since March 2022.

In the pricing in the money markets, it is expected that the Fed will make a total of 100 basis points of interest rate cuts by the end of the year, with a 32.5% probability of a 50 basis point interest rate cut in September and a 67.5% probability of a 25 basis point interest rate cut.