Federal Reserve Chair Jerome Powell signaled no rush to cut interest rates, underscoring the economy’s resilience while carefully balancing inflation control and labor market stability.
Speaking to business leaders in Dallas, Powell explained that “the economy is not sending any signals that we need to be in a hurry to lower rates.”
With U.S. growth outpacing global peers, Powell offered a cautiously optimistic outlook.
Although October saw a modest addition of just 12,000 jobs—affected by storm damage in the Southeast and labor strikes—the broader labor market remains solid, and unemployment, while slightly rising, is still low by historical standards.
Inflation continues to hover closer to the Fed’s 2% target, despite recent data showing a slight uptick in consumer and producer prices.
Powell noted that inflation in October stood at 2.3%, or 2.8% when excluding food and energy.
“Inflation is running much closer to our 2 percent longer-run goal, but it is not there yet. We are committed to finishing the job,” Powell said, describing the path ahead as potentially “sometimes bumpy.”
Markets responded with a downturn, as Powell’s remarks tempered expectations for a December rate cut.
Following a quarter-point cut last week and a half-point reduction in September, the Fed’s recalibration has shifted focus from exclusively tackling inflation to also sustaining growth in the labor market.
On the question of interest rates, Powell emphasized the complexity of achieving a neutral policy stance that neither accelerates nor restricts economic growth.
He likened the process to threading a needle: “We’re navigating between the risk that we move too quickly and the risk that we move too slowly.
Going a little slower, if the data let us, seems like a smart thing to do.”
The Fed is also reducing its massive balance sheet by allowing bond proceeds to roll off monthly, with no timeline for when this process might conclude.
Powell’s cautious tone reflects an approach aimed at balancing competing priorities in the economy while maintaining stability for businesses navigating uncertain conditions.
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