FED

The New York Fed's August Survey of Consumer Expectations showed that consumers' inflation expectations over the next three years rebounded slightly to 2.5% from July's 2.3%. Consumers' one- and five-year-ahead inflation expectations remained unchanged in August at 3.0% and 2.8%, respectively.

Fed Governor Waller said on Friday that the Fed should lower the target range for the federal funds rate at its next meeting in light of the considerable and ongoing progress in inflation, and he is open-minded about the size and pace of cuts.

The Fed's Beige Book on economic conditions on Wednesday indicates that the number of Districts experiencing stagnant or declining economic activity has increased to 9, up from 5 in July. Consumer spending has notably decreased in the majority of Districts, and there is a reduction in manufacturing activity. Moreover, there is a widespread expectation that price pressures will stabilize in the foreseeable future.

On August 26, San Francisco Fed President Daly said that with inflation falling back, there is no need to continue tightening monetary policy. It is time to adjust the policy as the labor market is fully balanced.

In a speech at the Jackson Hole Economic Symposium on August 23, Federal Reserve Chairman Powell said that the time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.

On Thursday, August 22, several FOMC officials express their views on interest rate cuts on the eve of the Jackson Hole Economic Symposium.

On Wednesday, the Fed released the minutes of its July meeting, which show that participants believed upside risks to the inflation outlook had diminished, while downside risks to employment had increased. Many participants noted that reducing policy restraint too late or too little could risk unduly weakening economic activity or employment. The "vast majority" of participants believed that a rate cut in September might be more appropriate.

Should the incoming data continue to show that inflation is moving sustainably toward our 2 percent goal, it will become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive, said Federal Reserve Governor Bowman in a speech on Tuesday, August 20.

Concerns about cooling demand have added pressure to businesses in a high-cost environment, according to a recent Federal Reserve Bank of Minneapolis survey.