Fed Chair Powell Hints at Gradual Rate Cuts Amid Economic Slowdown

Fed Chair Jerome Powell indicated that the U.S. economy is likely to experience a continued slowdown in inflation, potentially allowing for gradual interest rate cuts. Speaking at a conference, Powell noted that the Federal Reserve is not on a preset course and emphasized the importance of data in determining future decisions.

Federal Reserve Chair Jerome Powell suggested that the U.S. economy is on track for a continued reduction in inflation. This shift could enable the Fed to gradually reduce its benchmark interest rate, eventually reaching a level that no longer suppresses economic activity.

Speaking at the National Association for Business Economics conference in Nashville, Powell highlighted that the Fed is not committed to a specific path for rate changes. He emphasized a data-driven approach, stating, "The risks are two-sided, and we will continue to make our decisions meeting by meeting." Powell foresaw two more rate cuts, totaling 50 basis points, by the year's end, contingent on economic performance.

The Fed recently cut rates by half a percentage point, adjusting the range from a 20-year high of 5.25%-5.50% to 4.75%-5.00%. Market responses included a slight drop in the S&P 500 and rises in U.S. Treasury yields. Experts noted the Fed's cautious stance, with some suggesting it removed expectations of a more aggressive cut by year's end.

(With inputs from agencies.)