Fed Chairman Jerome Powell made clear that rates will be cut in September

818,000 jobs are drifting phantomly from report to report…. We can’t reduce them!

Federal Reserve Chairman Jerome Powell made clear on Friday (08/23/2024) that the central bank intends to cut interest rates at its next monetary policy meeting in September.

While Powell did not specify the size of the rate cut, he assured markets that the Fed is committed to preventing further weakness in the labor market.

“Now is the time to adjust policy,” Powell said during a keynote speech at the Kansas City Federal Reserve’s annual conference in Jackson Hole. “The direction is clear, and the timing and pace of rate cuts will depend on incoming data, the changing outlook, and the balance of risks.”

Markets react to Powell's remarks

Markets immediately responded positively to Powell's comments, which were largely expected. The Dow Jones Industrial Average rose 1% in the half-hour after Powell's remarks, while the S&P 500 and Nasdaq Composite rose 0.7% and 0.9%, respectively.

Impact on cryptocurrencies

Bitcoin (BTC) and Ethereum (ETH) also gained after the speech. Bitcoin rose 2.2% to 11 and at press time, the largest cryptocurrency was trading at around $61,000, up 0.5% over the past 24 hours. Ethereum is also up 1.8% over the past 24 hours, according to Coinbase data.

Employment data revision

Powell's comments came days after the release of revised data from the U.S. Bureau of Labor Statistics showing that for the 12 months ending March 2024, 818,000 fewer jobs were created than originally reported.

On Friday, Powell reiterated that central bankers “do not seek further cooling of the labor market” and will therefore take action by cutting interest rates in September. He expressed confidence that labor market strength can be maintained by “easing policy restrictions.”

“The labor market is unlikely to become a source of increased inflationary pressure in the near future,” he added.

Market Expectations

Futures markets showed a 65% chance of a 25 basis point rate cut next month, down from 76% expectations just a day earlier, according to CME Group data.

Powell’s comments confirmed that the Fed is prepared to take further action to maintain economic stability, and markets are already starting to factor this into their forecasts. The interest rate cuts in September could have a significant impact on a variety of financial assets, including cryptocurrencies, highlighting the importance of closely monitoring the Fed’s upcoming actions.

Author's opinion: oh, 818,000 jobs were not created. And according to statistics, they are written down. They are used to build growth charts of everything that can grow. And a year later – oops! There was a mistake. This reminds me of something…

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