Federal Reserve: 'It is Time to Cut Rates' after Decline in Inflation

The Chairman of the US Federal Reserve Jerome Powell said Friday that it is time to cut interest rates and adjust policy, noting that the inflation rate in the United States has declined, and "we are approaching the set target."

Powell added - in his speech during the annual meeting of central bank governors in Jackson Hole, Wyoming - that the timing and pace of interest rate cuts will depend on data, expectations and the balance of risks, stressing "strenuous efforts to support the strength of the labor market while making further progress toward price stability."

He pointed out that the pandemic directly affected supply chains, and millions of people left the labor market because of it, noting that worker levels did not return to their pre-pandemic levels until mid-2023; which led to the loss of workers and changes in the demand and supply market.

He explained that the Russian-Ukrainian war also caused an increase in energy prices, and there were many effects in addition to the impact of the pandemic and global supply chains with the ongoing closure in China; which caused a rapid rise in the prices of basic materials and inflation continued.

He pointed out that restrictive monetary policies led to a reduction in inflationary pressure and allowed growth to continue, as well as a reduction in layoffs from companies, indicating that recovery from the effects of the Corona pandemic and the increase in demand and expectations contributed jointly to achieving a reduction in inflation.