- Some of the increase in unemployment reflects a cool-down in the labor market from an overheated state
- The labor market is now roughly in balance and therefore unlikely to be a source of inflationary pressures going forward
- Is ready to start the process of rate cuts
- Monetary policy can be moved to a more neutral stance depending on data
- Williams signals readiness to cut rates: "Appropriate to dial down restrictiveness"
- Inflation moving "sustainably toward 2%," boosting confidence in policy effectiveness
- Labor market "roughly in balance," no longer a source of inflationary pressure
- GDP growth forecast: 2-2.5% for current year
- Unemployment rate projected at 4.25% by year-end (from 4.220% in today's jobs report)
- PCE inflation expected to moderate to 2.25% this year, near 2% next year
- Policy can move to more neutral setting over time, depending on data
- Fed remains vigilant on risks: U.S. labor market weakness, global slowdown, inflation surprises
- Future policy decisions to remain data-dependent, focused on dual mandate goals
- Full text
There isn't much of a signal here around the 25/50 bps debate and it reads like a boilerplate copy of Powell's Jackson Hole speech. We will hear from Waller at 11 am ET and that might be a stronger signal.
The topic of the speech was equipoise, which means a state of equilibrium.
Here is the 'conclusion' of the speech:
We’ve come a long way from the unacceptably high inflation and overheated labor market that we experienced two years ago. Monetary policy has been unequivocally focused on returning inflation to our 2 percent longer-run target. The risks to our two goals are now in better balance, and policy needs to adjust to reflect that balance. Of course, one clear lesson of the past several years is that the future is highly uncertain. Therefore, our decisions will be data-dependent, with a keen eye on the achievement of our maximum employment and price stability goals.
