What the Fed Chair said about various topics like employment, inflation, growth, policy

<p>Below is a summary of the comments from the Fed Chair Powell according to topics</p><p>Employment and Labor Market:</p><ul><li>There is a continuing strong pace of job growth.</li><li>Signs of labor supply and demand are coming into better balance.</li><li>Labor demand substantially exceeds supply.</li><li>Unemployment rate at the same level as lift off is seen as a real blessing.</li><li>Some softening in labor conditions is expected.</li><li>It's been observed that the softening is not through higher unemployment, but through fewer job openings and resignations.</li></ul><p>Inflation:</p><ul><li>Inflation has moderated somewhat but remains well above the long-run goal of 2%.</li><li>The process of getting inflation back to 2% still has a long way to go.</li><li>June CPI data was welcome but is seen as only one month's report. Looking for the signal from this to be replicated.</li><li>Headline inflation has come down sharply as energy and food prices have come down.</li><li>Housing inflation has started to work its way down.</li><li>It's expected to see core inflation come down as it is still elevated.</li><li>The overall picture is of tighter and still tightening credit conditions.</li></ul><p>Economic Growth:</p><ul><li>Growth in consumer spending has slowed from earlier in the year.</li><li>The housing sector has picked up, though it is still below 2022 levels.</li><li>A growth at moderate or modest levels is preferred.</li><li>Stronger growth over time could add to inflation and may require a policy response.</li></ul><p>Monetary Policy:</p><ul><li>Decisions are made on a meeting-by-meeting basis.</li><li>The committee will take into account the cumulative effects of monetary policy and the lags along with economic and financial developments.</li><li>The intermeeting data came in broadly in line with expectations.</li><li>Monetary policy is believed to be restrictive and is putting downward pressure on economic growth and inflation.</li><li>The active tool of monetary policy is rates. The September decision could be another hike or remaining where we are, depending on the data.</li></ul><p>Future Outlook:</p><ul><li>Expecting to hold policy at restrictive levels for some time to deal with inflation.</li><li>If incoming data suggests more hikes are needed, the committee is prepared to act.</li><li>Policy is working about as expected with overall resilience of the economy.</li><li>It's hoped that inflation will follow a lower path to be consistent with the CPI data.</li></ul><p>Financial Stability:</p><ul><li>There is a lot of uncertainty about outlook to next meeting let alone next year.</li><li>Things have stabilized in the banking system. Overall it remains strong and resilient but still being watched carefully.</li><li>The economy is seen to be weathering the banking turmoil quite well.</li><li>Banks are now working to see they are ready to use the discount window.</li></ul><p>Wages:</p><ul><li>The Fed is not targeting wage inflation and won't comment on union negotiations.</li><li>It is preferred to see wage growth at a rate consistent with 2% inflation over time.</li><li>Wages were not seen as an important cause of inflation early but are an important part of bringing inflation down now.</li></ul><p>US stocks are mixed after his press conference:</p><ul><li>Dow industrial average is up 12.59 points or 0.04% at 35451.55</li><li>S&amp;P index is down minus 9.65 points or -0.21% at 4557.99</li><li>NASDAQ index is down -47 points or -0.34% at 14095.74</li></ul><p>In the US debt market:</p><ul><li>2 year yield 4.845%, -4.8 basis points </li><li>5 year yield 4.105% -6.9 basis points</li><li>10 year yield 3.86% -5.3 basis points</li><li>30 year yield 3.932% -2.0 basis points </li></ul><p>In other markets:</p><ul><li>Crude oil is down $0.82 or -1.03% at $78.81</li><li>Gold is up $8 or 0.41% at $1972.78</li><li>Silver is up $0.19 or 0.79% at $24.88</li><li>Bitcoin is trading modestly higher $29,338</li></ul><p>In the forex:</p><ul><li>EURUSD: The EURUSD moved up to test the broken 38.2% retracement at 1.1106 and is currently trading right around the broken 100-hour moving average of 1.10897. The price traded above and below the 100-hour moving average during his press conference with a low of around 1.1055, and a high of 1.1106.</li><li>GBPUSD: The GBPUSD traded as low as 1.2900 and as high as 1.2960. The price moved back above the broken 38.2% retracement at 1.29311 and above the 100-hour moving average of 1.29433 in the process. The current price trades just above the 200-hour moving average at 1.2946.</li><li>USDJPY: The USDJPY moved down to test the rising 200 hour MA at 140.025. The price low reached 139.92 but has a bounce back and currently trades at 140.183.</li></ul>

This article was written by Greg Michalowski at www.forexlive.com.