Why Powell’s Jackson Hole Speech Suggests a US Interest Rate Cut is On the Way

It is an honor to participate in this conference commemorating the 100th anniversary of the founding of the Banco de Mexico. Gov. [Victoria] Rodriguez Ceja, thank you very much for inviting me. Let me note at the outset that the views I share are mine and not necessarily those of my colleagues on the Federal Open Market Committee (FOMC). The Banco de Mexico is a leader in the global central banking community. In 1994, the bank gained policy independence, which strengthened its ability to contain inflation. For the people of Mexico, that outcome has supported economic and financial stability. And for the world, it’s provided a strong example of the value of independent, objective monetary policymaking. The bank’s thought leadership receives worldwide recognition. Banxico is a driving force behind both CEMLA, the Center for Latin American Monetary Studies, and the Bank for International Settlements Representative Office for the Americas, both based here in Mexico City. I greatly appreciate the warm relationship between Banxico and the Dallas Fed. The economic ties between Mexico and the Eleventh Federal Reserve District are deep and longstanding. Our two banks co-host an annual conference on international economics, along with the University of Houston. And I and our entire research and leadership teams learn a great deal from the ongoing dialogue between our institutions. It is a true pleasure to celebrate your centennial with you here today and to have the opportunity to discuss the challenges of monetary policy implementation after the pandemic. This is an excellent topic for a centennial conference examining the most crucial questions in central banking. Implementing a central bank’s monetary policy efficiently and effectively is vital to the credibility of that policy and to public trust in the central bank. Yet there is no obvious single right way to implement policy. Every central bank’s operating framework reflects its history, its unique institutional context and the market environment it faces. And we learn over time. In light of both the extraordinary policy implementation actions many central banks undertook in response to the pandemic, and the changes in financial markets in recent years, now is a fitting time to take stock. Fed's Logan does not address outlook for monetary policy, economy in prepared remarks in Mexico City. Fed's Logan: The US has more room to reduce reserves.