(News Bulletin 247) – Jerome Powell spoke at the Jackson Hole symposium this Friday afternoon. Following his remarks, the dollar fell, as did US bond yields.

Jerome Powell meets investors’ expectations. The chairman of the American Federal Reserve (Fed) clearly opened the door on Friday, during his traditional speech in Jackson Hole (Wyoming), to a first rate cut at the institution’s next meeting, scheduled for September 17 and 18.

“The time has come for a monetary policy adjustment,” the central banker said, “the direction is clear.”

His “confidence has increased that inflation is on a sustainable path back to 2%,” the target set by the central bank’s mandate.

Dollar drop

In the highly codified language of central bankers, this is indeed a signal that the Fed’s monetary committee (FOMC) will lower its rates at its next meeting in mid-September, the last before the US presidential elections on November 5.

On Wednesday, the publication of the Fed’s “minutes”, the report of the previous meeting, had already raised this possibility: “the vast majority (of members, editor’s note) emphasize that, if the data continue in the expected direction, it would probably be appropriate to ease (monetary) policy at the next meeting”, it is written.

“We will do everything in our power to support a strong jobs market,” Powell also assured in Jackson Hole, a sign that employment is returning to the institution’s radar, while the pace of job creation is returning to the level it was before the pandemic.

After these statements, US bond yields fell. The rate on the 10-year US Treasury bond fell from 3.850% to 3.813%. The dollar fell. The euro thus advanced by 0.3% against the greenback, while it was stable before Jerome Powell’s speech.

The American indices have accelerated their rise a little. Around 4:10 p.m., the S&P 500 was up 1%.

(With AFP)