JACKSON HOLE, Wyo.—During the annual economic policy conference here, Federal Reserve Chairman Jerome Powell sounded a cautiously optimistic tone about the economy and indicated additional interest rate increases may be needed.
With markets and credit unions looking for any signal from the Fed on where directions are headed, Powell made clear there are numerous uncertainties in the forecast. He said the economy’s growth coupled with brisk consumer spending are contributing to pressure on the economy, and he reiterated the Fed’s determination to keep its benchmark rate elevated until price increases are reduced to the central bank’s 2% target.
“We are attentive to signs that the economy may not be cooling as expected,” Powell said during his remarks. “We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
‘A Familiar Refrain’
NAFCU Economist Noah Yosif said Powell’s speech “echoed a familiar refrain of cautious optimism.
“Against the backdrop of declining inflation and sustained labor market tightness, Chair Powell reiterated a hawkish baseline policy posture, suggesting the Fed will continue to focus on downside risks necessitating ‘additional policy firming,’ rather than scheduling any rate cuts in the near-term,” said Yosif. “This careful approach will provide an opportunity for real rates to chip away at the remnants of inflation, the Fed’s preferred course of action at this juncture, but will also leave the door open to further hikes if necessary."
During his remarks Powell made no mention of any potential rate reductions. As CUToday.info reported earlier, economists with Goldman Sachs recently forecast there will be no rate reductions until the second quarter of 2024 at the earliest.
‘Only the Beginning’
Powell told the conference the Fed will “proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data.”
He did call the decline in inflation “very good news,” before adding that “two months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. ... Although inflation has moved down from its peak — a welcome development — it remains too high.”
How to Get the Daily CU News Headlines In Your Inbox Each Day, For Free!
The biggest, best and freshest news reporting in credit unions remains free in ’23! Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more.
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.