Investing.com – US Federal Reserve Chairman Jerome Powell said in his latest statements that the economic risks facing the United States are like a double-edged sword, so the best solution is better to monitor economic data, always review this balance, and make a participation decision for each individual meeting.
Jerome Powell, in his first speech after the Fed’s decision to cut interest rates by 50 basis points in September, which came on a prepared margin in Nashville, continued that the Fed is ready to move to an accommodative monetary policy if the economy succeeds in growing. healthily.
Jerome Powell believes that the American economy is strong and strong, and the Federal Reserve is using all its tools to keep it in this state. Powell believed that the growth in the unemployment rate was not significant or harmful, and that the Fed succeeded in reducing the high rate of inflation without causing a large jump in the unemployment rate.
Powell said in a speech in Nashville that he and his colleagues will work to find a balance between reducing inflation and supporting the labor market, stressing that they will let economic data guide future decisions.
“Looking ahead, if economic conditions change as expected, monetary policy will move over time towards a more neutral position. He continued: “The risks are balanced, and we will continue to ‘ make our decisions meeting after meeting.”
Although the cut was expected, moving down 50 basis points is not an isolated move by the Fed. 2008.
Regarding this decision, Powell explained that it shows the belief of policy makers that it is time to reset monetary policy according to the current conditions. He noted that the Fed began fighting in March 2022, and policymakers have recently turned their attention, which Powell described as “strong,” although it has “clearly slowed down over the past year. “
“This decision reflects our growing confidence that, with an appropriate readjustment of our policy stance, labor market strength can be maintained in an environment of moderate economic growth and inflation falling to our target steadily,” Powell said.
“We do not believe we need to see another downturn in labor market conditions to achieve 2% inflation,” he said. But he gave no clear indication of the Fed’s expected next step.
Powell’s assertion that the Fed has not pre-decided on its policy is in line with his previous statements.
Lower rate than expected in November
Market expectations indicate that the Federal Reserve will move cautiously at its next meeting on November 6-7, with a quarter percent rate cut expected. However, traders expect the December decision to be bolder, with a cut of half a percentage point.
For his part, Powell expressed confidence in the strength of the economy and expected inflation to continue to slow down. Powell said that if things go as planned, the interest rate will be reduced by 25 basis points at the November meeting and 25 basis points at the December meeting.
The inflation rate in August was around 2.2% annually according to the Federal Reserve’s preferred price index. While this number is close to the Fed’s target of 2%, core inflation, which excludes fuel and food prices, remains at a higher rate of 2.7%. Policymakers generally consider headline inflation to be a better indicator of long-term trends given the volatility of energy and food prices.
Housing costs remain one of the most persistent areas of inflation, rising 0.5% in August. However, Powell believes that the data will eventually catch up with the decline in rental prices for renovated apartments.
He said: “Housing services continue to decline, but slowly as long as new rental rates remain low, inflation in housing services will continue to decline.
After his speech, Powell was scheduled to participate in a question-and-answer session with Morgan Stanley economist Ellen Zentner.
2024-09-30 18:12:00
#BREAKING #Jerome #Powell #Confirms #Fed #Specific #Plan #Meetings #Investing.com
