Federal Reserve Chair Jerome Powell on Tuesday delivers his last scheduled remarks before the Fed's next meeting with the economy enjoying stronger-than-expected growth and a recent jump in productivity, but still adjusting to tariff and immigration policies that economists worry could lead to both higher inflation and higher unemployment. Challenging for a central bank responsible for keeping inflation low and employment as high as possible, Powell and his colleagues are also facing a drought of official data amid a U.S. government shutdown that has delayed the September jobs report and other key statistics. An update on consumer prices is now scheduled for October 24, before the Fed's October 28-29 meeting.
Investors expect the Fed to lower its benchmark interest rate by a quarter-of-a-percentage point to the 3.75%-to-4.00% range, and then lower it again in December. However, the competing forces in the economy right now have become tangled, said EY-Parthenon Chief Economist Gregory Daco. "There are conflicting forces that are affecting the US economy, in particular, with the US economy essentially being constrained by tariffs...Also by reduced immigration," Daco said at a meeting of the National Association for Business Economics conference, where Powell speaks on Tuesday. "At the same time, we're seeing a great deal of...investment on the AI front... These forces are offsetting one another, not necessarily proportionally, not necessarily at the same time, but I think it's a very interesting duel."
Source: Reuters
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