Powell “Joins” the Dovish Camp, Citing Economic Risks as Stronger Grounds for Rate Cuts

According to a report by Jinse Finance, Federal Reserve Chairman Jerome Powell stated that the constantly "changing" economic risks have given the Fed more justification for a rate cut. These remarks indicate that Powell has aligned himself with the "dovish" camp within the Federal Open Market Committee, which is responsible for setting interest rates, and also signal that he may support a 25 basis point rate cut at the Fed's next meeting in September. Although Powell acknowledged that the impact of the government's trade war on consumer prices is now "clearly visible," he suggested that this effect is unlikely to persist and may instead be a one-off shock that the central bank can disregard. He stated, "Given that the labor market is not particularly tight and is facing increasing downside risks, such an outcome (of sustained inflation) seems unlikely." He also added, "Inflation faces upside risks, while employment faces downside risks, which is quite a challenging situation." (Jin10)