Federal Reserve Chairman Jerome Powell said today at a conference hosted by the National Association for Business Economics that the U.S. labor market remains solid despite a gradual slowdown in inflation. He also hinted that there may not be a significant rate cut this month at the Fed's next two meetings.
Powell said during the question-and-answer session:
"This is not a committee rushing to cut rates quickly. Ultimately, we will be guided by incoming data."
The U.S. central bank began its long-awaited easing policy earlier this month, cutting its benchmark interest rate for the first time in four years. The first major rate cut of 50 basis points was seen as a major move after holding rates at two-decade highs for more than a year.
Powell said that if the economy performs as expected, two more rate cuts are expected this year, adding: "The federal funds rate will fall by 50 basis points by the end of the year."
At the same time, traders' expectations that the Federal Reserve will cut interest rates by 25 basis points in October further strengthened, rising to 65% from 46% the previous day, according to FedWatch data. Meanwhile, financial market participants expect a target interest rate range of 4.00%-4.25% after the December meeting, 75 basis points lower than currently.
The Fed has been trying to provide a so-called "soft landing" for the economy, where inflation falls without a sharp rise in unemployment. Although the Fed is increasingly confident, Powell said the central bank is still prepared to continue to adjust policy based on the data:
"If the economy slows more than we expect, we can cut rates faster; if the economy slows less than expected, we can cut rates more slowly. We will adjust the pace of our actions as needed."
Although Powell issued a signal to continue cutting interest rates, it still did not have any boosting effect on Bitcoin. Bitcoin even fell below US$63,000 this morning and has rebounded to above US$63,000 at the time of writing.
Source
