In his speech delivered to the Economic Club of New York, Jerome Powell, Chairman of the Federal Reserve, acknowledged that signs of cooling inflation have been seen, but stated that the Bank would stay resolute in its purpose of reaching a 2% mandate. Investor speculation for a potential November rate hike was erased, and the chances of one in December lowered; however, Powell made clear that continuous vigilance was necessary to secure the Bank's objectives. He noted that while inflation has gone down, it is not yet moderated sustainably to the 2% goal. He highlighted that this path may be unpredictable and take time, but that him and his collaborators are united in achieving inflation sustainability. His remarks also noted that whilst higher interest rates pose a difficulty, he does not believe that the policy is too tight at present. Traders responded positively to the speech, with stocks rising, and the 10-year Treasury yield taking a pause from the heights of the session.Recently, data has revealed that while inflation is still above the target rate, the rate of monthly increases has decreased and the annual rate has declined to 3.7%, a much lower figure than the 9% from June of 2022. Powell noted at a dinner of the club that the labor market and economic growth may need to slow in order to ultimately achieve the Federal Reserve's goal.Climate Defiance activists halted the beginning of the affair by gathering at the platform and holding a banner that read "Fed is burning" with the words "money, futures and planet" surrounding it. After a brief disruption, Powell suggested that a sustainable return to the 2% inflation target may necessitate a period of below-trend growth and a diminished labor market.Since March 2022, the Federal Reserve has raised interest rates 11 times, taking the benchmark rate to its peak in 22 years. Despite this, Powell maintained that the economy is managing these hikes without issue. On the same day, initial jobless claims had their lowest weekly rate since early 2023, demonstrating the tightness of the labor market, which could increase inflation. Many anticipate no more rate hikes to occur currently as officials watch the delayed effects of prior hikes on the economy. Powell did not hint at any future policy plans, but instead commented that the Committee will make decisions depending on the incoming data, outlook and the risks.
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