Largely echoing his testimony to Congress and his recent press conference dovishness, Fed Chair Powell reaffirmed that rate cuts will come “if appropriate,” sending stocks higher.
“In addition, issues such as the U.S. federal debt ceiling and Brexit remain unresolved. FOMC participants have also raised concerns about a more prolonged shortfall in inflation below our 2% target. Market-based measures of inflation compensation have shifted down, and some survey-based expectations measures are near the bottom of their historical ranges”
“Many FOMC participants judged at the time of our most recent meeting in June that the combination of these factors strengthens the case for a somewhat more accommodative stance of policy. We are carefully monitoring these developments and assessing their implications for the U.S economic outlook and inflation, and will act as appropriate to sustain the expansion”
And the algos love the news, pushing The Dow back into the green…
Speaking more broadly, Powell says U.S. economic developments affect rest of the world and vice versa:
“Pursuing our domestic mandates in this new world requires that we understand the anticipated effects of these interconnections and incorporate them into our policy decision-making”
“A legacy of the crisis is that policy makers now have a broader range of tested tools to turn to the next time the effective lower bound is reached. We must continue to assess additional strategies and tools to bolster our economies and meet our inflation and employment mandates”
What would we do without him?