Fed Press Conference – 07/26/23

In today’s press conference, Federal Reserve chair Jerome Powell talked about the Fed’s main goals: creating as many jobs as possible and keeping prices stable for everyone in the US. He admitted that high inflation, or prices rising quickly, is a problem and said the Fed is working hard to slow this down to a goal of 2%.

Since early last year, the Fed has taken steps to control the economy by raising interest rates and reducing the number of securities it holds. We still don’t know how much impact these changes will have. Future decisions will depend on what economic data shows.

Right now, the economy is growing moderately. People are spending less than before, and businesses are investing less due to higher interest rates and slower growth. The housing market isn’t doing as well because of higher mortgage rates.

Jobs are still being added at a good pace, but it’s slower than before. The unemployment rate is low at 3.6%, and more people, especially those aged 25 to 54 years, are participating in the workforce. Even though there are more job seekers than jobs, the gap is getting smaller.

Inflation, or the rate at which prices are increasing, is still higher than the Fed’s 2% goal. Even though it has slowed down a bit since the middle of last year, getting it back to 2% is still a big job.

The Fed is aware that high inflation can be tough, especially for those who struggle to afford basic things like food, housing, and transport. So, they’ve raised the target range for the federal funds rate (the interest rate that banks charge each other) by 1/4 percentage point and continue to reduce their securities holdings.

This change means the total interest rate has gone up by 5-1/4 percentage points since last year. This is impacting areas like housing and investment the most, but we’ll have to wait to see the full impact on inflation. Things like tighter credit conditions could also slow down the economy and hiring, and affect inflation.

The Fed will keep all these factors in mind when making future decisions. Their aim is to get inflation back to 2%, even if it means slower growth and a bit of slack in the labor market.

In the end, Powell reiterated the Fed’s commitment to their goals of maximum employment and price stability. He acknowledged their decisions can have big impacts on communities, families, and businesses across the US.

In Conclusion:
While the Fed’s hawkish stance could lead to some short-term volatility and potential downward pressure on the stock market, it could also help to ensure the long-term health of the economy. As always, investors should keep a close eye on economic indicators and the Fed’s policy decisions, and consider their own risk tolerance and investment goals when making decisions.


DailyBubble’s Disclaimer
This article provided by the DailyBubble team should only be considered as informational and/or entertainment by the reader. DailyBubble makes no representation to buy or sell any security or financial instrument within the article. Readers seeking investment advice should seek independent financial advice from a professional, and independently research and verify. The DailyBubble team wrote this article and may express its own opinions therein.

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