Fed Chair Powell on interest rate cuts! What did he say about Trump's policies?

Federal Reserve (Fed) Chair Jerome Powell made assessments regarding the economic outlook at an event held in Dallas.

Recalling that they cut the policy rate by 25 basis points last week, taking into account the progress made in bringing inflation down to the target and the cooling in the labor market, and that they took another step toward reducing the degree of policy restriction, Powell said they believe that by appropriately recalibrating the policy stance, the strength in the economy and the labor market can be maintained and inflation can sustainably return to 2 percent.

Powell stated that they will bring policy to a more neutral level over time, but noted that the path to reach that level is not predetermined.

Emphasizing that they will carefully evaluate incoming data, the evolving outlook, and the balance of risks when considering additional adjustments to the interest rate, Powell said, "The economy is not sending any signals that we need to be in a hurry to lower interest rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully."

Powell conveyed that the trajectory of the policy interest rate will depend on how incoming data and the economic outlook evolve.

"WE ARE COMMITTED TO MAINTAINING THE STRENGTH OF OUR ECONOMY BY RETURNING INFLATION TO OUR TARGET"

Stating that they aim to bring inflation down to their target level without the rise in unemployment that has often accompanied efforts to lower high inflation in the past, Powell said, "While the job is not yet done, we have made significant progress toward achieving this outcome."

Powell explained that the economy has made significant progress toward the goals of maximum employment and price stability, and that the labor market remains in a solid state.

Noting that inflation has declined significantly from its peak and that they believe it is on a sustainable path toward the 2 percent target, Powell said, "We are committed to maintaining the strength of our economy by returning inflation to our target while supporting maximum employment."

Powell emphasized that the labor market has cooled to a point where it is no longer a significant source of inflationary pressure, and that inflation is much closer to the long-term 2 percent target, though it is not there yet. Powell used the expression, "We are committed to finishing the job."

Fed Chair Powell noted that he expects inflation to continue to decline toward the 2 percent target, even if it follows a bumpy path from time to time.

Touching upon the data released today regarding producer inflation in the US, Powell said the data showed a slightly higher increase than they had expected.

Powell stated that he thinks the general trend is still solid, and that they will evaluate more data before the meeting in December, adding, "If the economy weakens, we have plenty of room to lower interest rates."

"IT IS TOO EARLY TO ASSESS THE IMPACT OF TRUMP'S POLICIES"

Answering a question about the independence of the Fed, Powell emphasized that they do not consider the interests of any political party when making decisions.

Powell underlined that they make decisions by looking at macroeconomic data, and said that independent central banks do a better job in fighting inflation.

Stating that it is too early to estimate the impact of the policies that US President-elect Donald Trump will implement, Powell said, "We know that policies in several areas will change. We don't know how much they will change. We don't know over what time frame they will change. When it comes to fiscal policy, it takes quite a long time to pass a bill through Congress. I think we will be careful about changing policy until we have more certainty."

News Source: AA