The World Affairs Council, Federal Reserve Bank of Dallas, and Dallas Regional Chamber hosted a crucial lecture by Federal Reserve Chair Jerome Powell on economic prospects and monetary policy yesterday. Powell was optimistic about the U.S. economy and stressed prudent monetary policy changes.
Powell said the U.S. economy has recovered from the worldwide epidemic and is strong. He said that the nation’s economic production expanded above 3% last year and 2.5% this year. Powell attributes this accomplishment to strong consumer spending and corporate investment, notwithstanding housing market difficulties. He noted that labor force growth and productivity have increased the nation’s economic potential without overheating.
Powell said the labor market had cooled to a sustainable level following previous overheating. He noted that the employment market is now closer to balance, with job postings almost matching jobless people actively seeking work. Powell said that although the unemployment rate has climbed to 4.1%, it has steadied and remains low by historical standards. He also emphasized that pay growth has eased but remains solid and sustainable.
Powell said the labor market’s cooling and improving supply conditions had lowered inflation. Inflation has dropped significantly since mid-2022, when it peaked at 7%. Over the 12 months ended in October, total personal consumption expenditures (PCE) prices grew 2.3%, while core PCE prices, which exclude food and energy, gained 2.8%. Though inflation is still far from the Fed’s 2% objective, Powell seemed optimistic.
Powell reported that the FOMC cut the policy interest rate by 0.25%. He indicated that the Fed is gradually adopting a more neutral policy stance to prevent disturbing economic momentum. Powell stressed the difficult balance between lowering inflation and strengthening the economy and labor market. Despite the economy’s strength, the Fed is not rushing to decrease rates. Data-driven modifications will take into account changing economic circumstances and hazards, he said.
Powell stressed that the Fed wants to bring inflation to its objective without raising unemployment. He acknowledged the considerable accomplishments but stressed that the task is not complete.
Bitcoin, Ethereum, and Solana prices are down 1.6%, 3.4%, and 4%, respectively, in the previous 24 hours after the speech. The only significant cryptocurrency to break the trend is XRP, up 14% to $0.8105. Crypto experts and influencers connect this breakthrough to U.S. SEC chief Gary Gensler’s recent statements, which some perceive as a resignation signal.
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