Jerome Powell's Statements on Monetary Policy Path:
- The Federal Reserve must exercise caution before deciding to lower interest rates.
- An unexpected weakening in the labor market would prompt us to take action.
- We are mindful of the risks associated with initiating interest rate cuts either too early or too late.
- Wage increases are trending towards more sustainable levels.
- Despite this, wage growth remains above equilibrium levels, with inflation potentially returning to the Fed’s 2% target by the end of next year or the year after.
- On the impact of political conditions on monetary policy, Powell strongly emphasized the independence of the Federal Reserve.
- The U.S. government deficit is very large and unsustainable, necessitating prompt action to address it.
- A 4% unemployment rate, though low, would be a favorable stabilization point.
- Inflation should be at or below 2% within a year.
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