US Federal Reserve (Fed) Chairman Jerome Powell spoke at the Jackson Hole Economics Symposium.
Powell stated at the meeting in September that the size of the rate hike will depend entirely on the data. Stating that they have implemented a restrictive policy that will bring inflation to the 2 percent target, Powell said, “It will be necessary to continue with restrictive policies for a while. High inflation in the USA is the result of strong demand and supply problems. High inflation has become widespread. Inflation remains high, increasing the likelihood of high inflation expectations becoming entrenched.” he said.
Powell stated that he expects the Fed to continue to increase interest rates for a while, and this will have painful consequences for the US economy.
‘HIGH INTEREST, SLOW GROWTH’
Stating that despite 4 interest rate hikes in a row, it is not time to stop yet, Powell said, “While high interest rates, slow growth and stagnation in the labor market will reduce inflation, these will hurt households and companies. This is an unfortunate cost of reducing inflation. However, not achieving price stability will hurt much more. causes it,” he said.
WILL USE TOOLS ‘STRONGLY’
Stating that price stability is the basis of the economy, Powell said, “Without price stability, the economy does not serve anyone.”
Jerome Powell emphasized that the Fed will continue to use the tools at its disposal to fight inflation.
IT TAKES SHORT THAN EXPECTED
The much-anticipated speech of the Fed Chairman was extremely short compared to the Jackson Hole speeches in previous years. The explanations were limited to 6 pages in total. Powell drew attention to this situation at the beginning of his speech and said, “My explanations will be shorter, my focus will be narrower and my message will be more direct.”
NO SIGNIFICANT MOVEMENT IN THE DOLLAR
Before the Fed Chairman’s speech, the dollar/TL was following a course of around 18.18. During and after the speech, there was no significant movement in the wolf at the first moment.
Similarly, Euro/dollar continued its course just above 1.
The ounce price of gold increased from $ 1,744 to $ 1,755 during the speech, then it was withdrawn to $ 1,743.
DECREASE IN US STOCK EXCHANGES
On the other hand, the announcement that interest rate hikes would continue strongly led to a decline in the US stock markets. At first, the Dow Jones fell 1.2 percent, the S&P 500 1.4 percent, and the Nasdaq Composite Index fell 1.5 percent.