We're going to go right now to Jay Powell has become speaking and delivering this speech. >> In my remarks today, I will first address the current economic situation in the near term outlook for monetary policy. I will then turn to the results of our second public review of our monetary policy framework, as captured in the revised Statement on Longer Run Goals and Monetary Policy Strategy that we released today.When I appeared at this podium one year ago, the economy was at an inflection point. Our policy r ...

Monetary Policy Framework - The policy decisions are guided by principles that consider deviations from goals and varying time horizons for achieving the dual mandate of maximum employment and price stability [1] - Monetary policy is forward-looking, considering the time lags in its effects on the economy, thus policy actions depend on the economic outlook and balance of risks [2] - Setting a numerical goal for employment is considered unwise because the maximum level of employment is not directly measurable and changes over time for reasons unrelated to monetary policy [3] - A longer-run inflation rate of 2% is viewed as most consistent with the dual mandate goals, and commitment to this target helps keep longer-term inflation expectations well anchored [3] Inflation Target - Experience has shown that 2% inflation is low enough to ensure that inflation is not a concern in household and business decision-making while also providing a central bank with some policy flexibility to provide accommodation during economic downturns [4] Review Cycle - The consensus statement retained a commitment to conduct a public review roughly every 5 years to reassess structural features of the economy and engage with the public, practitioners, and academics on the performance of the framework [4][5]

Fed Chair Jerome Powell delivers what almost certainly will be his last keynote address at the central bank’s annual conclave during one of the most tumultuous times in its history. What’s at stake is the near-term sentiment for financial markets, the longer-term path of the Fed’s policy trajectory, and a not insignificant dose of trying to preserve vestiges of independence at a time when the normally sacrosanct institution is facing enormous political pressure. The speech is billed as an “Economic Outlook ...

Inflation & Employment - The Fed minutes indicate a divided open market committee regarding the greater risk between upside risk to inflation and downside risk to employment [1][2] - A majority of participants judged the upside risk to inflation as the greater of the two risks [1] - Several participants viewed the two risks as roughly balanced, while a couple considered downside risk to employment the more salient risk [2] - Inflation is somewhat above the 2% goal, and the unemployment rate remains low, with employment at or near estimates of maximum employment [3] - The Fed expects inflation to increase in the near term, with tariff effects becoming more apparent [4] Economic Outlook - Uncertainty about the economic outlook remains elevated, and some participants mentioned indicators suggesting a softening in labor demand [3] - Growth of economic activity slowed in the first half of the year, and several participants expect growth to remain slow for the second half [6] - A decline in immigration is lowering both actual and potential output growth [6] - Increased use of AI in the workplace may lower employment going forward [6] Tariffs - Evidence suggests that domestic businesses and consumers are predominantly bearing the tariff costs [5][6] - A few participants noted that tariff-related factors could lead to stubbornly elevated inflation [5]

Global Economic Trends - The former first world is largely becoming the descending world [2] - Much of the former third world is now the ascending world [2] - Edelman's numbers correlate with GDP figures and visible improvements in countries like Saudi Arabia, Malaysia, India, and China [1] Data Reliability - There are potential concerns regarding the accuracy of Edelman's numbers for specific regions, such as Nigeria and Kenya [1]

Key Takeaways from the Conference Call Industry Overview - The discussion revolves around the **US Public Policy & Economics** sector, specifically focusing on **tariff rates** and their implications on the economy and trade policy [3][4][10]. Core Insights 1. **Current Tariff Rates**: The average tariff rate is estimated at **15.1%** due to recent agreements with the **European Union**, **Japan**, and **South Korea**. Tariffs on **Brazil**, **India**, and **Switzerland** contribute approximately **0.8 percentage points** to this rate [3][10]. 2. **Economic Outlook**: The economic scenario suggests **slow growth** with a projected **real GDP growth** of **1.0%** year-over-year by the end of **2025**. The **core PCE inflation rate** is expected to be **3.3%** [4][10]. 3. **Future Tariff Projections**: It is anticipated that average tariff rates could rise to the **16-17%** range by the end of **2025**. Recent tariff announcements have not altered this outlook [4][10]. 4. **Trade Policy Uncertainty**: While short-term uncertainty has decreased, long-term uncertainty remains. There is potential for negotiations to lower tariff rates for certain countries, with a solid floor around **10%** for tariffs [5][10]. 5. **Sector-Specific Impacts**: The retail and footwear sectors are expected to be significantly impacted due to higher tariffs, particularly for imports from **Vietnam** and **Thailand**, which have rates above the baseline of **20%** [10][11]. Additional Important Points - The **USMCA** exemption covers about **95%** of trade with Canada, indicating that the majority of US imports are not affected by the recent tariff hikes [11]. - The **equity strategists** maintain an **underweight** position on consumer discretionary goods due to concentrated exposure in sectors affected by higher tariffs [10][11]. This summary encapsulates the key points discussed in the conference call, highlighting the current state of tariffs, economic outlook, and sector-specific impacts.

Labor Market Analysis - The labor market shows signs that should be watched carefully, with headline numbers coming down [2] - Unemployment remains within the 41% to 43% range for the past year, indicating a healthy labor market that is still well in balance [2] - The labor market is largely in balance, but dynamism is lacking, making it harder to find a job if one doesn't have one [4][5] - Businesses fought hard to assemble and train their labor force and are reluctant to let them go, but this may not last if demand decreases [10] - Potential weakening on the labor side is anticipated, which might warrant a response, balanced against inflation concerns [11][12] Inflation and Tariffs - Inflation is a bigger and longer-lasting problem, with the Fed missing its target for four and a half years [5] - People are feeling the pain of inflation, making difficult choices and finding their $400 emergency fund doesn't stretch as far [6] - The US is missing more on the inflation side than on the employment side [7] - Expectation is that inflation numbers will tick up, with $30 billion a month in tariff revenues being paid by someone [13] - Importers have borne a lot of the tariff costs to date, but they can't absorb those costs anymore and will start pushing that out into prices to consumers [14] - Inflation is expected to continue to tick up into the end of this year [15] Monetary Policy and Economic Outlook - Uncertainty has been high for businesses, making it difficult to make investments and execute plans [9] - The economy is operating right around a neutral long-term rate, and the current stance is modestly restrictive [16] - September is a realistic possibility for a rate move, but one month's data is not determinative [17][18] - It's a tricky time for monetary policymakers, as both sides of the dual mandate (maximum employment and stable prices) could potentially be in conflict [20][21] - Companies have been delaying, postponing, or scaling back investment plans [23] Fed Credibility and Independence - The speaker has enormous respect for Chair Powell, who acts with integrity and aims to do what's best for the American people [26][27] - Independent central banks lead to better economic outcomes [31]

No change. The Federal Reserve holding rates steady in the range of four and a quarter to four and a half percent. But two Federal Reserve governors Chris Waller and Michelle Bowman dissenting, preferring to cut rates by 25 basis points, underscoring division within this Federal Reserve over the impact of President Trump's tariffs on inflation.This is the first time in 30 years that we have seen two Federal Reserve governors descent simultaneously. Now, there were some changes to the policy statement. Notab ...

Federal Reserve Policy & Economic Outlook - The Federal Reserve is in no rush to adjust interest rates due to uncertainty about the economy, inflation, and the labor market [3] - The unemployment rate remains stable, similar to the previous summer [1][2][5] - The Fed aims to prevent any rise in inflation from becoming persistent, emphasizing the importance of keeping inflation expectations in check through patience [3] - The market anticipates rate cuts in the coming year, regardless of economic data, potentially influenced by a new Fed chair [13] - All Federal Open Market Committee members expect interest rates to be lower by the end of next year [17] Labor Market Dynamics - Labor demand growth is slowing, but the labor market hasn't loosened because the unemployment rate is unchanged [5] - Both labor supply and labor demand have slowed, with immigration policy being a contributing factor to the slowdown in labor supply [2][5] - Payroll employment growth has decelerated, which could become problematic if the trend continues [4] Tariff Impact & Trade Policy - The impact of tariffs on the economy is uncertain, particularly regarding inflation and business fixed investment [3][10] - A hypothetical 18%-20% tariff rate is compared to the economic tensions of the 1930s [6] - The current tariff shock may be more significant than in the 1930s due to a higher share of imports in GDP [8] - Most economists believe that tariffs will eventually be passed through to consumers, with every 1% increase in tariffs as a percent of imports adding about 01% to the price level [11][12] - An increase from 25% to 17%-18% in tariffs on imports could raise the level of prices by about 05% [12]

Monetary Policy - The Federal Reserve maintained the interest rate range at 425 to 450 basis points [1] - Two governors dissented, favoring a 25 basis point rate cut [1] - Nine votes supported holding rates steady [2] Economic Outlook - Economic growth moderated in the first half of the year [3] - Uncertainty about the economic outlook remains elevated [3][4] - Inflation remains somewhat elevated [4] - The labor market is solid with low unemployment [4] Forward Guidance - The statement does not hint at an imminent rate cut in September [5] - The committee is attentive to risks on both sides of the mandate [4] - Swings in exports continue to affect the data [2]