Federal Reserve Eyes Rate Cuts Amid Positive Inflation Trends

Fed Chair Jerome Powell discussed the potential for interest rate cuts during a speech addressing the current state of the U.S. economy. Powell indicated a broad-based disinflation trend, which may lead to lower rates over time. However, he emphasized a cautious approach, with decisions made on a meeting-by-meeting basis.

Fed Chair Jerome Powell has suggested that the Federal Reserve might be positioned to reduce its benchmark interest rate, thanks to ongoing disinflation trends. Addressing the National Association for Business Economics in Nashville, Tennessee, Powell noted that inflation is approaching the Fed's 2% target, which could lead to a more neutral monetary stance in the near future.

The Fed recently reduced rates by half a percentage point, from a 20-year high to a current range of 4.75%-5.00%. Powell indicated more cuts might be on the horizon, but cautioned that each decision would be made on a 'meeting by meeting' basis, considering evolving economic data.

Despite a solid job market and a decline in goods prices, Powell highlighted uneven progress in housing inflation. Stocks eased slightly and Treasury yields rose following his remarks, reflecting mixed investor sentiment. Powell assured that the economy remains robust and the Fed aims to sustain this momentum without triggering a rise in unemployment.

(With inputs from agencies.)