Powell: Rate Cuts on Hold as US Economy Stays Strong

Federal Reserve Chair Jerome Powell suggests a delay in anticipated rate cuts due to the US economy's continued strength. He emphasizes a cautious approach towards interest rate reductions, highlighting the need to assess evolving economic data, inflation targets, and labor market stability before making policy changes.

In a key development for monetary policy, Federal Reserve Chair Jerome Powell revealed that expected rate cuts might be deferred owing to the U.S. economy's persistent robustness. Speaking on Thursday, Powell underscored there is no pressing need to decrease interest rates swiftly, permitting the Federal Reserve more strategic deliberation.

Powell articulated, "The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully." He clarified that while the Fed leans towards a neutral policy stance, the trajectory remains contingent upon future economic data.

He highlighted that the Federal Open Market Committee recently slashed the policy interest rate by 25 basis points, marking a pivot toward monetary easing. Additionally, Powell affirmed the Fed's vigilant assessment of new data, economic projections, and balancing risks when contemplating further federal funds rate alterations.

Addressing inflation, Powell noted its proximity to the Federal Reserve's 2% target, though slightly elevated. He declared, "We are committed to finishing the job," emphasizing the Fed's objective of sustainably aligning inflation with its long-term goal. Powell acknowledged ongoing challenges, noting that achieving the inflation target may see turbulent times.

Moreover, Powell cited the US labor market's perceived cooling as influencing the Fed's recent policy verdict. He expressed confidence in a meticulously calibrated policy strategy to uphold economic fortitude, stabilize the labor market, and steadily steer inflation to the 2% target.

Nonetheless, Powell warned that achieving these goals will require vigilant monitoring and modification as the economic climate changes. On November 8, the Federal Reserve's FOMC decreed a 25-basis-point reduction in its policy interest rate, aimed at buttressing economic stability amidst a shift in monetary strategy.

This decision recalibrated the federal funds rate target to a range of 4.5% to 4.75%.

(With inputs from agencies.)