Federal Reserve Chairman Jerome Powell said on Thursday that the recent performance of the US economy gives the monetary policy committee time to think about its future decisions, saying, Fed doesn't need to be 'in a hurry' to reduce interest rates.
Powell noted during a panel discussion at an event hosted by the Federal Reserve Bank of Dallas that the US labor market is strong, and inflation is on a sustainable path toward the 2 percent target, expecting inflation to continue to slow in the coming period, although some slippages may be seen at times.
Government data released this week showed the annual inflation rate rising by about 2.6% in October 2024, in line with market expectations, but higher than the Fed’s 2% target.
Regarding the impact of political changes in the United States after the victory of Republican candidate Donald Trump in the recent presidential elections, Powell reiterated that Federal Reserve members do not consider political changes when making monetary policy decisions.
He also noted that fiscal policy measures, which relate to tax laws or tariffs, will not affect the decisions taken by the Federal Reserve in the near term, saying, “When it comes to fiscal policy, it takes a long time to pass a bill.”
These are the latest comments from the Fed chairman after the decision to cut US interest rates by 25 basis points last week, to the range of 4.5-4.75%, after cutting them by 50 basis points for the first time in four and a half years at the September meeting.
Powell’s recent comments raised uncertainty about the path of interest rates, although he reiterated his assertion that the decision will depend on how the incoming data and economic expectations develop, as financial markets reduced the chances of the bank cutting interest rates at the December meeting.
Traders’ data on the FedWatch tool shows that the probability of a 25 basis point rate cut by the Federal Reserve at the December meeting has decreased to 62%, from 80% before Powell’s comments.
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