Jerome Powell Jackson Hole Speech: The US central bank Federal Reserve has kept the way to cut interest rates but is moving forward with a cautious attitude. This signal has been given by Fed Chairman Jerome Powell. In his speech at Fed’s annual Conclave in Jackson Hole, Wayoming, Powell said that uncertainty is much higher and this is making work difficult for monetary policymakers. Their thing indicates that if the possibility is created, the fed can cut interest rates.
Powell also said that the effect of the new American tariff is clearly visible. Prices of things have started increasing. Powell in his speech mentioned major changes in tax, trade and immigration policy. He emphasized that the labor market remains strong and the economy is displaying flexibility. But downside risk is increasing. According to Powell, negative risks for employment are increasing.
Tariff can increase inflation, risk of recession may increase
Powell also warned that tariffs can increase inflation again, which may increase the risk of recession. This is a situation from which the Federal Reserve wants to escape. He further said that it is appropriate to assume that the tariff of US President Donald Trump will only have a temporary impact on inflation.