Federal Reserve Chair Jerome Powell has said that a strong U.S. economy will allow the central bank to take its time lowering interest rates.
Speaking to business leaders in Dallas, Texas, Powell said: “The economy is not sending any signals that we need to be in a hurry to lower rates.”
The Fed Chair added that the U.S. labour market is holding up well despite disappointing job growth in October that he attributed to storm damage and labour strikes.
Powell noted that the U.S. unemployment rate has been rising but has flattened out in recent months and remains low by historic measures.
On the question of inflation, he said progress has been “broad based,” noting that the central bank expects it to continue falling back towards its 2% target.
Powell highlighted that inflation is currently at 2.3%, or 2.8% excluding volatile food and energy prices.
“We are committed to finishing the job” on inflation, said Powell.
Powell’s cautious view has led future traders to lower their expectations for an interest rate cut this December. Traders are now placing odds of a year-end rate cut at 50%.
The remarks come a week after the Federal Reserve lowered the central bank’s benchmark interest rate by 25-basis points, taking it down to a range of 4.50% to 4.75%.
So far in 2024, the Fed has lowered interest rates a total of 75-basis points. Markets still expect the Fed to continue cutting rates in 2025.
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