Stocks were higher in intraday trading on Thursday after Federal Reserve Chairman Jerome Powell said the central bank would seek inflation that averages 2% over time and adopted a new strategy that reflects the Fed's "view that a robust job market can be sustained without causing an outbreak of inflation."
In what Powell called a "robust updating of our monetary policy framework," the changes mean the Fed essentially will keep rates near zero even if inflation tracks above the Fed’s target level of 2%.
“The maximum level of employment is a broad-based and inclusive goal,” Powell said in a virtual address at the central bank’s annual Jackson Hole symposium. “This change reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities.”
Americans applying for first-time jobless benefits remained above 1 million again last week, and the U.S. economy in the second quarter contracted slightly less than originally estimated.
Hurricane Laura, which made landfall earlier this morning, has forced the closure of 80% of Gulf oil production and a third of the region’s refining capacity.
The destruction to refineries could cost $5 billion, Chuck Watson, a disaster modeler with Enki Research, told Bloomberg. The storm could cause as much as $25 billion in damage and economic losses, he said.
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