By Aditya Raghunath
Investing.com – US Federal Reserve Chairman Jerome Powell spoke about the cut at the Jackson Hole Symposium. It was a largely benign speech that gave US stock markets a lot of encouragement, taking them to all-time highs.
Global markets are expected to take the plunge as markets reopen on Monday. He said he would wait before making a decision on lowering and increasing interest rates.
With the Delta variant of the COVID virus still posing a downside risk, he said reducing was only an option if the economy recovered quickly. “If the economy were to go broadly as expected, it might be appropriate to start reducing the pace of asset purchases this year,” said Powell.
“Today, with a substantial slack in the job market and the pandemic continuing, such a mistake could be particularly damaging,” Powell said in prepared remarks.
“The timing and pace of the upcoming reduction in asset purchases will not be intended to send a direct signal about when to take off interest rates, for which we have articulated a different and significantly stricter test,” Powell said.
If tapering begins this year, expect the markets to be affected. However, the US Fed is clear that it will not raise interest rates.