The US Federal Reserve does not need to rush to cut interest rates due to the ongoing economic growth, a solid job market, and inflation that remains above its 2% target, said Fed Chair Jerome Powell.
According to Powell, the Fed policymakers believe inflation is progressing toward a “sustainable path to 2%” that will enable the US central bank to move monetary policy “over time to a more neutral setting” that isn’t meant to slow the economy, Reuters reported.
However, what might be the neutral rate in the current economic environment, as well as the pace at which the US Federal Reserve might aim to achieve it, remains uncertain.
This is particularly relevant as central bankers evaluate the ongoing strength of the economy and consider the potential impacts of the incoming Donald Trump administration’s policies — ranging from higher tariffs to reduced immigrant labor — on economic growth and inflation.
At present, Powell noted, the economy is not signaling any distress that would necessitate an accelerated pace of rate cuts. On the contrary, he remarked, “if the data allow us to proceed a bit more gradually, that seems to be the prudent course of action.”
“The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully,” Jerome Powell said in prepared remarks delivered at a Dallas Fed event, Reuters reported.
Powell’s remarks…
