PT Solid Gold Berjangka | Fed’s Powell Says Rate Cuts Can Continue to Support Soft Landing
FISCAL & MONETARY SOLID GOLD BERJANGKA, SG BERJANGKA , SOLID GROUP, PT SGB , SGB
Solid Gold Berjangka | Federal Reserve Chair Jerome Powell said the central bank would continue to reduce interest rates from a two-decade high to help support hiring and preserve a growing economy.
“Overall, the economy is in solid shape; we intend to use our tools to keep it there,” he said in remarks prepared for a talk Monday afternoon at a conference in Nashville, Tenn.
The Fed lowered interest rates by a half-percentage point at its meeting two weeks ago, opting for a bolder start in making its first rate reduction since 2020. That dropped the central bank’s benchmark rate to a range between 4.75% and 5%, and down from its highest level in two decades.
Since their most recent meeting, several Fed officials have suggested the central bank might continue to lower interest rates in more traditional — and smaller — quarter-point increments unless the economy weakens more notably. The Fed’s next meeting is Nov. 6-7, and a rate cut of at least a quarter point is widely expected. Officials will have two more months of employment data and one more month of inflation data before then.
Powell said officials were focused on bringing rates down to a level that neither spurs nor slows economic activity, though he didn’t say that necessarily needed to occur hastily.
“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course,” Powell said. “The risks are two-sided, and we will continue to make our decisions meeting by meeting.”
With inflation having fallen considerably over the past two years, officials have shifted their focus toward preventing past rate increases from further weakening the U.S. labor market because they no longer believe it poses a risk of sustaining higher inflation.
Prices as measured by the Fed’s preferred inflation gauge were up 2.2% in August from a year earlier. A separate measure that excludes volatile food and energy prices was up 2.7% in August. Those measures jumped to as high as 7.2% and 5.6%, respectively, in 2022. The Fed targets 2% inflation.
Meanwhile, more signs that the job market is softening have cropped up. The unemployment rate stood at 4.2% in August, up from 3.7% in January. Powell in August signaled he was shifting the Fed’s attention to preventing what for now looks like a gentle cooling in labor demand from turning into a deeper freeze.
The Fed’s rate cut at its Sept. 17-18 meeting reflected officials’ growing confidence that, by recalibrating interest rates lower, the labor market could remain strong while inflation continues to decline to the central bank’s target, Powell said. The Fed leader repeated his view that the job market didn’t need to see any additional slowing to finish the fight against inflation.
Officials have said they hope to achieve a so-called soft landing that brings inflation down without a sharp rise in joblessness. “While the task is not complete, we have made a good deal of progress toward that outcome,” Powell said at an annual gathering of the National Association for Business Economics.
Source : Wall Street Journal