New Delhi [India], November 15 : The Federal Reserve Chair, Jerome Powell, indicated that the anticipated rate cuts may be delayed, as the US economy continues to show signs of strength.
Powell emphasized on Thursday that the economy is not signalling a need for an urgent reduction in interest rates, allowing the Federal Reserve to take a more measured approach.
He said "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".
Powell explained that while the Federal Reserve is moving towards a more neutral policy stance, the path to reach that point is not fixed and will depend on how the economic data evolves.
He also mentioned that last week, the Federal Open Market Committee (FOMC) reduced the policy interest rate by a quarter percentage point, signalling a shift towards loosening monetary policy.
Powell added that the central bank remains committed to evaluating incoming data, the economic outlook, and the balance of risks when making any further adjustments to the federal funds rate.
On inflation, Powell said, it is getting closer to Fed's 2 per cent target but still remains above it. He stated, "We are committed to finishing the job," highlighting the central bank's goal of bringing inflation down sustainably to the target.
"Inflation is running much closer to our 2 per cent longer-run goal, but it is not there yet" said Powell
However, Powell warned that the road to achieving the inflation target may be bumpy. He also shared that the US labour market, which has shown signs of cooling, was also a factor in the Fed's recent policy decision.
Overall, Powell expressed confidence that with a well-calibrated policy approach, the Fed can maintain economic strength, keep the labour market stable, and gradually bring inflation down to the 2 per cent 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 toward monetary easing aimed at supporting economic stability.
The decision by the Federal Open Market Committee (FOMC) lowered the federal funds rate target to a range of 4.5 per cent to 4.75 per cent.
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