US Federal Reserve Chair Jerome Powell Hints at Interest Rate Cuts Amid Inflation Control
US Federal Reserve Chair Jerome Powell suggested that it might be time for the US central bank to reduce interest rates as inflation rates are aligning with its target. Speaking at the Jackson Hole Symposium, Powell stated, “The time has come for policy to adjust.” However, he did not specify the extent of the rate cut.
During the COVID-19 pandemic, the US monetary policy committee raised the policy rate by 425 basis points in 2022 and another 100 basis points in 2023 to combat high inflation. Since July 2023, the policy rate has been held at its current restrictive level.
Powell noted that inflation, which had peaked in the summer of 2022, has since declined by 4-4.5 percentage points. He expressed confidence that inflation is on a sustainable path back to the Fed’s 2% goal. Consumer prices in the US rose 2.9% over the 12 months to July, the smallest annual increase since March 2021.
In the latest meeting held on July 30-31, 2024, the Federal Open Market Committee decided to maintain the target range for the federal funds rate at 5.25 to 5.5%. Most Fed members indicated a policy rate cut in the upcoming September meeting.
Powell also mentioned that the labor market has cooled but remains strong. The unemployment rate has risen to 4.3%, mainly due to an increase in the supply of workers and a slowdown in hiring.
Doubts Revealed
US Federal Reserve -: The US Federal Reserve, often called the Fed, is like the big bank for the United States. It helps control the money and keeps the economy stable.
Jerome Powell -: Jerome Powell is the person in charge of the US Federal Reserve. He makes important decisions about money and the economy.
Interest Rate Cuts -: Interest rate cuts mean lowering the cost of borrowing money. This can help people and businesses spend more, which can boost the economy.
Inflation -: Inflation is when prices for things like food and clothes go up. It means you need more money to buy the same things.
Jackson Hole Symposium -: The Jackson Hole Symposium is a big meeting where important people talk about the economy. It happens every year in a place called Jackson Hole in the US.
COVID-19 pandemic -: The COVID-19 pandemic was a time when a virus made many people sick all around the world. It also affected jobs and the economy.
Labor Market -: The labor market is about jobs and people working. If the labor market is strong, it means many people have jobs.
