In this post:
- According to the chair of the Federal Reserve, a robust economy allows Fed officials to cut interest rates “carefully.”
- Officials at the Federal Reserve anticipate that inflation will keep returning to the 2% objective set by the central bank.
- Powell stated that the Fed is certain that its monetary position will be appropriately reevaluated.
On November 14, Jerome Powell, the chairman of the Federal Reserve, stated that policymakers will be able to determine how quickly to cut interest rates if the U.S. economy continues to develop well.
Powell contends that there are no indications from the economy that the Fed should be rushing to cut interest rates. The Fed chair claims that the current state of the economy enables the Fed to make cautious interest rate choices.
Additionally, Powell stated that he is optimistic since the current economic growth was rated as the greatest of any major economy worldwide.
Powell acknowledges that a strong economy allows the central bank to lower interest rates
BREAKING: Fed Chair Powell says the Fed does not need to be "in a hurry" to reduce interest rates.
— The Kobeissi Letter (@KobeissiLetter) November 14, 2024
He said, "the economy is not sending any signals that we need to be in a hurry to lower rates."
Why did the Fed cut by 50 basis points in September? pic.twitter.com/ujHNkj7FMa
The chair of the Federal Reserve emphasized that a strong economy with low unemployment, strong consumer spending, and growing corporate investment allows the central bank to gradually lower interest rates.
“The economy is not sending any signals that we need to be in a hurry to lower rates.”
– Jerome H. Powell
Powell said that it can make thoughtful choices because of the economy’s current strength.In fact, he acknowledged that despite October’s lackluster growth, the job market is doing well.
Powell, meanwhile, blamed labor strikes and hurricane damage in the Southeast for last month’s weak labor market growth.
Additionally, he pointed out that although the unemployment rate has been growing, it has leveled off recently and is still low by historical standards.
Officials at the Federal Reserve anticipate further declines in inflation
The chief of the central bank also discussed inflation, pointing to widespread advancements.
Powell claims that Fed policymakers anticipate inflation to keep moving back toward the 2% target set by the central bank.
The Fed chair thinks the road to success may be rocky at times.Nevertheless, the inflation statistics released this week indicated that both producer and consumer prices had increased, and 12-month rates were moving farther away from the Fed’s order. The Federal Reserve chair highlighted that the two indexes are indicating inflation by the Fed’s preferred measure at 2.3% in October, or 2.8% excluding food and energy.
Powell’s remarks came a week after the Federal Open Market Committee lowered the central bank’s benchmark borrowing rate by a quarter percentage point. The FOMC cut the borrowing rates down into a range between 4.5%-4.75 following a half-point cut in September.
The central bank chair described FOMC’s move as a recalibration of monetary policy that no longer needs to be focused on stomping out inflation. Powell claimed that the Fed now has a balanced aim at sustaining the labor market as well.
But when it came to offering his personal prediction for December and 2025, Powell was silent. He said that although the Fed is unsure of the goal, it wants to lower its key rate to a neutral level that neither stimulates nor restrains growth.
Powell kept silent despite the fact that markets generally anticipate the Fed to continue with another quarter-point decrease in December and then a couple more in 2025. Powell went on to say that the Fed is certain that economic and labor market resilience can be sustained with a suitable reorientation of its policy approach.
Additionally, the Fed chair stated that if inflation steadily declines below 2%, the Fed would gradually adjust policy to a more neutral setting, but the path for getting there is not yet preset.
