The President of the US Federal Reserve, Jerome Powell said on Thursday that the Federal Reserve should not rush to cut interest rates.
Inflation is “sustainably moving towards 2%”, which allows for a gradual easing of monetary policy, he said at an event in Dallas, but also warned that
the pace of interest rate cuts is “not predetermined”.
“The economy is not sending any signs that we should rush to cut interest rates. The current momentum in the economy allows us to approach our decisions with caution,” Powell said.
He called the current state of the American economy “remarkably good.” He highlighted the 4.1% unemployment rate, the 2.5% annual economic growth, the expansion of consumer spending and business investment.
Powell pointed out that the most important inflation indicators are still above the target value.
The president of the Fed emphasized that the central bank still believes in a gradual decline in inflation, but cautioned. “The main aspects of inflation are closer to rates consistent with our targets … We are watching carefully to make sure of that. Inflation is much closer to our longer-term target of 2%, but not there yet,” he said.
Financial markets are currently expecting the Fed to cut the key interest rate by another quarter of a percentage point at its meeting in mid-December. At the same time, due to the election victory of President Donald Trump and stubbornly high inflation data, analysts expect fewer interest rate cuts next year.
Cover image source: MTI Photo/Jim Lo Scalzo
Source: www.portfolio.hu
