Powell has signaled that more rate cuts are in the pipeline.
Federal Reserve Chair Jerome Powell signaled Monday that more interest rate cuts are in the pipeline but suggested they would occur at a measured pace intended to support a still-healthy economy.
His comments, at a conference of the National Association for Business Economics in Nashville, Tennessee, disappointed the hopes of many investors that the Fed would implement another steep half-point reduction in its key rate before the end of the year. The Fed cut its rate by a larger-than-usual half point earlier this month as it has moved past its inflation fight and pivoted toward supporting the job market.
The broad S&P 500 stock index initially fell 0.6% after his remarks, but recovered afterwards to close about 0.4% higher.
“We’re looking at it as a process that will play out over some time,” Powell said during a question and answer session, referring to the Fed’s interest rate reductions, “not something that we need to go fast on. It’ll depend on the data, the speed at which we actually go.”
Economists are already pointing to Friday’s jobs report as a key piece of data that could alter the Fed’s policy path. If the unemployment rate rises noticeably or hiring stumbles, officials could consider a sharper rate cut later this year.
At their last meeting Sept. 18, Fed officials reduced their rate to 4.8%, from a two-decade high of 5.3%, and penciled in two more quarter-point rate cuts in November and December. On Monday, Powell said that remains the most likely outcome.
“If the economy performs as expected, that would mean two more cuts this year,” both by a quarter-point, Powell said.
Fed chair says US economy is in ‘solid shape,’ gradual rate cuts coming – ABC News (go.com)