(Bloomberg) — Stocks rallied across the board and bond yields tumbled, with Jerome Powell giving its clearest signal yet that the Federal Reserve will begin cutting interest rates in September.
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While Wall Street had already priced in the start of policy easing next month, Powell’s comments that the “time has come” validated those views. Now there are plenty of other aspects in his Jackson Hole speech that shouldn’t be overlooked. For one, the Fed chief acknowledged recent progress on inflation. Then there’s the fact the he sees the economy growing at a “solid pace” — which provides reassurance after the recent growth jitters.
But it was actually his emphasis on the “cooling labor market” that got the attention of many market observers. Basically, it was seen as an indication the Fed will do whatever it can to avoid a pronounced slowdown.
“The market should be happy with this speech because…
