Jerome Powell Discusses US Economy and Interest Rates
Jerome Powell, the Chair of the Federal Reserve, has indicated that the expected rate cuts might be postponed due to the ongoing strength of the US economy. On Thursday, Powell emphasized that there is no immediate need to lower interest rates, allowing the Federal Reserve to proceed cautiously. He stated, “The economy is not sending any signals that we need to be in a hurry to lower rates.”
Powell explained that while the Federal Reserve is moving towards a more neutral policy stance, the path to achieving this is flexible and will depend on future economic data. Last week, the Federal Open Market Committee (FOMC) reduced the policy interest rate by a quarter percentage point, indicating a shift towards easing monetary policy.
Regarding inflation, Powell noted that it is nearing the Fed’s 2% target but remains above it. He expressed the central bank’s commitment to bringing inflation down sustainably to the target, stating, “Inflation is running much closer to our 2% longer-run goal, but it is not there yet.”
Powell also mentioned that the US labor market, which has shown signs of cooling, influenced the Fed’s recent policy decision. He expressed confidence that with a well-calibrated policy approach, the Fed can maintain economic strength, stabilize the labor market, and gradually reduce inflation to the 2% goal. However, he cautioned that the path to achieving this will be closely monitored and adjusted as necessary based on the evolving economic landscape.
Last week, on November 8, the US Federal Reserve lowered its policy interest rate by 25 basis points, continuing a shift towards monetary easing aimed at supporting economic stability. The decision by the FOMC lowered the federal funds rate target to a range of 4.5% to 4.75%.
Doubts Revealed
Jerome Powell -: Jerome Powell is the Chair of the Federal Reserve, which is like the central bank of the United States. He helps make important decisions about the country’s money and economy.
Federal Reserve -: The Federal Reserve, often called the Fed, is the central bank of the United States. It helps control the money supply and interest rates to keep the economy stable.
Interest Rates -: Interest rates are like the cost of borrowing money. When interest rates are high, borrowing money is more expensive, and when they are low, it’s cheaper.
Rate Cuts -: Rate cuts mean lowering the interest rates. This can make borrowing money cheaper, which can help boost the economy.
Neutral Policy Stance -: A neutral policy stance means the Federal Reserve is not trying to speed up or slow down the economy. They are waiting to see how the economy behaves before making changes.
Inflation -: Inflation is when prices for goods and services go up over time. A little inflation is normal, but too much can make things very expensive.
Labor Market -: The labor market is about jobs and employment. A cooling labor market means there are fewer new jobs being created, or people are not getting hired as quickly.