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News & Views

Provided by the Investment Professionals of Frost Investment Advisors | August 29 , 2022

Powell Keeps it Short and Stays on Script; U.S. Spending and Income Holds Up at Least for Now; China’s Highly Uncertain Future; U.S. Economic Data is Mixed

Powell is Serious About Controlling Inflation, and Wall Street is Finally Accepting It

Federal Reserve Chairman Jerome Powell came into Jackson Hole with one job, to communicate the Fed’s commitment to rein in inflation. He accomplished this in a succinct eight-minute speech that never wavered. He acknowledged that this hawkish stance would result in below-trend growth, a softening labor market and pain for households and businesses, but he insisted that the failure to tame inflation would be far worse. He noted that the historical record cautions against prematurely loosening policy, warning that the Fed would need more than a single month’s worth of data -- inflation fell a bit in July -- for policy to change course. Powell also discussed the substantial imbalance between supply and demand for available workers, noting that this is a cost that is particularly difficult to cool once set in motion.

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