Original article by: André Beganski
原文标题：Fed's Powell Pumps the Brakes on Another Jumbo Rate Cut This Year
Original source: Decrypt
Compiled by: Koala, Mars Finance
Federal Reserve Chairman Jerome Powell said on Monday that the U.S. central bank's "base case" is for two small interest rate cuts before the end of the year.
Bitcoin prices fell on Monday after Federal Reserve Chairman Jerome Powell said central bank policymakers were in no rush to cut borrowing rates.
Powell, speaking at a National Association for Business Economics conference, discussed how the U.S. labor market remains solid as inflation cools, and said the Fed should not repeat this month’s big rate cuts at its next two meetings.
“This committee is in no rush to cut rates,” Powell said during a question-and-answer session. “Ultimately, we’re going to be guided by the incoming data.”
Earlier this month, the U.S. central bank began its long-awaited easing, cutting its benchmark borrowing rate for the first time in four years. The first 50 basis point cut was a significant move after keeping rates at 20-year highs for more than a year.
Lower borrowing rates are generally a good sign for risky assets such as stocks and cryptocurrencies. Bitcoin prices have risen 7% to around $63,750 since the September rate cut. But Powell noted that the forecasts released at the same time as the September rate cut showed that the reduction was relatively mild.
“If the economy performs as expected, that would mean two more rate cuts this year,” he said, adding that the federal funds rate would be “50 basis points lower” by the end of the year.
Meanwhile, Fed futures traders are leaning toward a 25 basis point rate cut at the central bank’s October meeting, with the CME Group’s FedWatch tool showing the odds rising to 65% from 46% the day before. Meanwhile, financial market participants are leaning toward a target rate range of 4.00% to 4.25% after the December meeting, 75 basis points lower than now.
The Federal Reserve's most closely watched inflation measure, the personal consumption expenditures (PCE) price index, rose 0.1% in August, less than expected, on Friday. The index is now up 2.2% over the past year, just above the Fed's 2% target.
The PCE data "supports expectations of a 50 basis point rate cut at the Fed's next meeting," BRN analyst Valentin Fournier wrote in a note to Decrypt. However, "the full impact of the recent rate cut will be analyzed in the coming months," he wrote.
Powell himself has struck a cautious note, saying Monday that policymakers’ base case is that easing will be “a process that takes some time to play out and not something we need to do quickly.”
While the Fed has grown more confident in its efforts to achieve a so-called soft landing for the economy, where inflation falls but unemployment doesn’t rise sharply, Powell said the central bank is ready to adjust based on the data.
“If the economy slows more than we expect, then we can cut rates faster, and if the economy slows less than we expect, we can cut rates slower,” he said. “We’ll do whatever it takes in terms of how fast we move.”
